Outlook: Barrett of Lombard Street keeps Kremlinologists guessing

Heat stroke; AMP/Henderson; Listing perils

Kremlinoligists looking for clues to the management succession at Barclays will have left yesterday's results presentation none the wiser.

Matt Barrett introduced his head of investment banking, Bob Diamond, with a beaming smile of approval but the man sat at the chief executive's right hand was the finance director John Varley. Both fancy themselves as Mr Barrett's successor, along with a couple of other internal candidates, but none has yet been anointed.

First Barclays has to persuade the institutions that it would be a good idea for Mr Barrett to succeed Sir Peter Middleton as chairman even though this flies in the face of the latest box-tickers charter drawn up by Derek Higgs.

If Mr Barrett was a mine of non-information about his successor, then at least he was more forthcoming in his assessment of the credit boom. Bankers are paid to take a view on such things. His message was don't panic, a sentiment which the Bank of England had already taken on board yesterday when it predictably left interest rates on hold after last month's surprise and perhaps rash cut in the cost of borrowing.

Barclaycard may be going gangbusters, helping Barclays to lift profits by rather more than the market had expected to a shade under £2bn for the first half of the year. But the debts its customers are racking up are serviceable. Even though the bank's bad debt provisions rose when loans to customers in South American are stripped out, Mr Barrett is confident there is no credit crunch looming on this side of the Atlantic.

With mortgage rates at a 50-year low, inflation subdued and employment prospects benign, perhaps he is right. Halifax's housing affordability index, which is as good a proxy as any for how well consumers are coping with debt, is well above its long-term average.

Throw in the nascent recovery in the productive half of the economy, the pace at which public sector growth is taking up the slack as consumer spending slows and America's escape from double dip recession and the risk of boom turning to bust looks even more remote.

In banking, of course, it is never enough to ride the cycle although plenty of chief executives appear to be content with that. The holy grail is to flatten the cycle and Mr Barrett's spectacular pay package set three years ago relies upon him doing so. So far, Barclays is ahead of its cost-cutting target but only just as its cost to income ratio - the measure which shows how much more efficient it is becoming - remains stuck obstinately on a plateau. Barclays is also behind on its cumulative profit target.

But its primary goal of keeping shareholder returns in the top quartile continues to be met and this is the one which determines a big chunk of what Mr Barrett will take home over the course of his contract. Mr Barrett once said he would be a bargain for Barclays even if he picked up the full £40m which was theoretically achievable. He will not get near to that unless there is a truly remarkable return to bull markets. But he will still do nicely which helps explain why the succession race continues to be so keenly contested. And so intently watched.

Heat stroke

Greggs' goal in life, according to the company mission statement, is to make its baker's shops A Great Place to Work. Except perhaps when the thermometer is hovering close to 100 and it already feels like an oven outside. Its customers don't much like going into Greggs' shops either and sales of sausage rolls have fallen off a cliff. When most other retailers are shifting their produce like hot cakes according to the official figures, Greggs is taking a beating from the weather.

It was only a matter of time before the heatwave claimed its first corporate victim and Greggs came up with a scorcher of a profits warning yesterday which burnt the shares nicely. Hot weather knocks the stuffing out of sales, said the managing director cheerfully, as he announced that Greggs was scaling back its roll out of new shops this year.

Greggs is not alone in feeling the heat. New Look has blamed sales of skimpy tops for lower revenues, although this appears to be as much of a fashion statement as a meteorological phenomenon. Stand by for more weather-related excuses from elsewhere on the high street. What about bingo hall and night club operators, who must be sweating it out. And then there are the water companies who seem able to conjure up droughts at the drop of the hat as soon as there is a bit of sun.

What a pity it is that Albert Fisher, the undisputed master of the weather-related profit warning, is no longer with us. El Nino wrecked its lettuce harvest, a cold snap froze its cockle beds, and wet weather played havoc with the pea harvest in East Anglia. Just think what new misery it could have inflicted on investors if only it was still around.

AMP/Henderson

When confronted with an awkward story, the oldest trick in the book is to deny something that was never asserted in the first place.

The statement issued yesterday to the Australian Stock Exchange by AMP in response to our revelations about lax standards in its London fund management arm Henderson Global Investors, is a classic of the genre.

AMP says the review carried out by its internal audit team at Henderson did not find any breaches of any client mandate. This was never stated. What AMP does not dispute is that the review was sparked by a series of "high-profile mandate breaches" in the past. Perhaps it would like to elaborate on what these were.

AMP also contends that the processes under review did not relate to client matters. This is correct only if failures in compliance, staff monitoring and record keeping are matter about which is clients would not be concerned.

If, as AMP says, the report was a first draft which contained "some inaccuracies", then what were these inaccuracies and how does AMP explain why the document included a long list of agreed action plans, naming those responsible for implementing them?

AMP has a lot of questions to answer and investors clearly think likewise which helps explain why Moody's cut its credit rating yesterday while the shares hit a new all-time low.

Listing perils

It is just as well that companies seek public listings for the access it gives them to a wider pool of capital rather than to boost profits. For the latest research by Ernst & Young shows that of the 466 UK companies which floated between 1998 and 2002, only four in 10 increased their earnings.

The state of the economy was undoubtedly one factor but another which the research highlights is the amount companies pay out in expenses when going public to companies like, er, Ernst & Young.

David Wilkinson, E&Y's IPO guru says solemnly that too many companies were just not ready to float or perhaps lacked a sufficiently robust business model. Perhaps E&Y might also like to consider whether it is killing the goose that lays the golden egg when it submits its next bill for helping a client to float.

m.harrison@independent.co.uk