Loss will find a way
THE BANKS have been worrying Alan Abelson, my opposite number at Barron's in New York. In his column 'Up and Down Wall Street' he poses the question: how will they get it wrong this time? All the familiar ways have stopped working. Their Third World debtors have become respectable, property is no longer a black hole, and when their customers stopped borrowing money there was nothing much they could do with it, beyond taking it on deposit at 2 per cent and lending it to the US govern- ment at 6 per cent. Mr Abelson's faith has been tested: 'A man likes to believe that there are still eternal verities, and one of the most enduring of these is that the banks, against all the odds, will find a way to lose money.' He is counting on the hedge funds, highly adventurous, heavily bor- rowed, and playing (of course) with the banks' funds. That looks a sound bet, but he need not wait for it to come up. If he scans the accounts, he will see that Barclays managed to lose £675 million on his own hospitable shores, including (as we surely must) the US Virgin Islands. Losses in France bring the total up to a round billion. They include a stinging write-down on the Paris building that came in when Barclays brought L'Europeenne de Banque and was one of the attractions of the deal. What Barclays wanted most in Paris, says my man in the Rue Laffitte, was a grand head office. You see what Mr Abelson means.
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