"Mystic Bob Diamond
The ebullient BarCap boss has been looking into his crystal ball and guess what, the better than expected earnings reported by Goldman, Wells Fargo aren’t a “one-off” phenomenon.
They will be repeated, says Bob.
“You have to look at which banks have improved their competitive position in this period, and in that regard I don’t think it’s a one-off,” Diamond, 57, said in an interview today on Bloomberg Television.
“If I step back and look at the Wells Fargo earnings and the Goldman Sachs earnings, there’s good news for the whole industry there,” Diamond said. “It has been quite a while since we’ve seen analysts talk about revenue as opposed to writedowns and balance-sheet risks.”
By that we presume Diamond means the favourable widening of bid/offer spreads in customer flow business and the fact that many of BarCap’s (and for that matter Goldman’s rivals) have failed, merged and therefore withdrawn, or scaled back, from certain markets, such as fixed income, commodities and currencies.
Of course, not everyone thinks the first quarter results we be repeated. Many in the blogsphere suspect Goldman’s first quarter results will prove to be “non-recurring” in nature because they were mainly due to the unwinding of AIG hedges.
And Wednesday’s results from UBS prove that all is still not well in the IB world.
That said, Barclays’ purchase of Lehman Brother’s North American business out of bankruptcy does look to have been well timed. It has given the bank strong positions in several markets, such as US government debt, which are pretty attractive right now.
Little wonder Diamond has this to say to Bloomberg about the Lehman deal.
“When we look back, we really have to pinch ourselves.”
So do we Bob.