Jim Armitage: Spare no tears as Glencore's bosses are paying such a small price

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In case you were feeling sorry for the kings of Glencore for having to shell out all those hundreds of millions of pounds to bail out their business, here’s a thought. 

Despite the fact Ivan Glasenberg has had to chip in £137.6 million, Daniel Mate £42.2 million and Telis Mistakidis £51.8 million, it still only represents a quarter of what they’ve taken out of the company in dividends since flotation in 2011.

Though the paper money they made stuffing our pension funds with shares in their absurdly over-valued business has now collapsed by four-fifths, they’ve still been coining it in real, hard cash.

Glasenberg’s dividend take alone has been nearly three-quarters of a billion dollars over the four years.

Meanwhile his shares — for which he has paid little cash until now, remember — are still worth £1.4 billion. And that’s before you look at management’s everyday pay and bonuses.

Glasenberg and his crew are traders first and foremost — they’ve been evaluating risk and placing bets every day of their professional lives. Ordinarily, given their legendary smarts, you’d think the clever move would be to follow their example and buy into the stock — fund managers obviously did last night.

But, as with most trades these guys make in their day-to-day lives, this deal has more angles than it first seems.

For a start, Glencore management were forced into doing it against their will — how else do you explain the sudden turnaround from Glasenberg’s message to the market three weeks earlier that no such recapitalisation was necessary?

And if they weren’t keen to do it, perhaps it’s not the smart trade for external investors after all.

Without the fundraising, Glencore’s credit rating was under threat, potentially hampering its traders’ positions. Other factors were also doubtless in management minds, which we’ll never know.

And that has always been the problem with Glencore: nobody on the outside could ever really expect to understand how a secretive bunch of Swiss-based traders in an industry renowned for sailing close to the wind really thinks and operates. 

Which prompts the question: why did our fund managers ever believe it was a suitable place to put our pensions in the first place?

123 at £5 = £100 million

Retail banking chiefs are only talking about one thing this week: Santander’s decision to whack up the fees on its hugely popular 123 account, raising its monthly fee for customers from £2 to £5 a month.

Back-of-an-envelope calculations suggest the fee hike will bring in a cool £100 million a year.

Nice to have at a time of continued low interest rates and ever-increasing bank overheads.

Source Article from http://www.standard.co.uk/business/jim-armitage-spare-no-tears-as-glencores-bosses-are-paying-such-a-small-price-a2949031.html

September 16, 2015 |
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