Middle East investment concerns earn ‘red top’ grade
Investment advisers at the Institutional Voting Information Service run by the Association of British Insurers (ABI) have issued a red top warning on Barclays after the bank announced no executive bonuses and re-election of its entire board.
The troubled bank is facing a shareholder rebellion over its controversial refinancing plan. It is using money from middle-eastern sovereign wealth funds rather than using the UK government’s rescue package that would be cheaper.
Peter Montagnon, the ABI’s Director of Investment Affairs, said: “For the sake of clarity, a red top does not constitute advice to vote against the proposals, but rather the presence of an issue of grave concern. Shareholders will have to weigh up all relevant factors, including the consequences of rejection for Barclays and the wider banking system. The Board should not therefore assume that votes in favour of the proposal constitute support for the way it has approached the issue. The red top establishes a firm basis of principle for further dialogue with Barclays and other companies in future.”
After agreeing with Qatar Holding LLC and “entities representing the beneficial interests of HH Sheikh Mansour Bin Zayed Al Nahyan” on 31 October 2008 to invest substantial funds into Barclays the bank was forced to call shareholders bluff.
In a statement yesterday the bank said: “In recognition of the extraordinary circumstances of the Capital Raising, the Board of Barclays also announces that all members of the Board will exceptionally offer themselves for re-election at the Barclays Annual General Meeting to be held in April 2009; and no annual bonuses will be paid to executive directors for 2008, following the offer by the executive directors to waive any annual bonus for 2008.”
ABI members own about a fifth of the stock market. The Times reported that the ABI wanted all companies to submit their boards to annual election as a result of Barclays offer.
