UK funds hit by latest banking scandal
FE Trustnet takes a look at which UK products have been hit hardest by the interest rate fixing scandal.
By Mark Smith, Senior reporter
Friday June 29, 2012
Several popular UK funds have seen millions of pounds wiped out in the wake of the rate-rigging affair, according to the latest FE Trustnet research.
saw its stock fall 30.45p - or 15 per cent, following revelations that traders had been involved in bribing officials into rigging the key inter-bank lending rate to boost profits.
The bank has been fined £290m and there are widespread calls for chief executive Bob Diamond to step down.
Performance of stock over 12 months
Source: FE Analytics
The £733m Schroder Income Maximiser
, £663m Jupiter UK Growth
and £525m Fidelity Moneybuilder Growth
funds are the best known funds to be affected by the latest banking sector scandal. Each has around 4 per cent of assets invested in the stricken bank, according to FE data.
These funds are by no means the worst affected, however, Majedie UK Focus
and Stan Life Inv UK Equity Recovery
have more than 5 per cent allocated to the bank. In total 39 funds list Barclays in their top-10 holdings.
“We have to seriously question the veracity of internal controls and procedures at BarCap,” commented Henderson UK Alpha fund manager Stephen Peak.
“Politicians have already been baying for blood and calling for the head of Bob Diamond, especially as he was in charge at BarCap at the time. We feel that the Barclays board will instinctively wish to resist this as Diamond is clearly the architect and leading light of Barclays but feel that the pressure may be too great.”
The fund manager points out that the huge reputational cost of the scandal for Barclays, and the banking sector as a whole, will be much harder to recoup than the fine imposed by the regulators.
Banks, are seized by a huge public image problem. Following the collapse of Lehman Brothers in 2008 and, more recently, the scandal surrounding the miss-selling of PPI insurance, the fragile financials sector can ill-afford another damaging affair.
Peak added: “We have yet another episode that demonstrates the disconnect between what most of us think is reasonable and decent behaviour and that which has taken place at the banks. When remuneration is added to the mix is not a surprise that we are entering another period of debate over the structure of and pay at banks. We think it inevitable that the pragmatic stance taken thus far will be stretched to breaking point and beyond – there will be more changes and regulation.”
Today Royal Bank of Scotland
chief executive Stephen Hester announced that he would not be taking home a bonus this year and, with RBS shares falling 11.5 per cent yesterday, there is much speculation that the bank could also be tied up in the libor-fixing affair.
Data from FE Analytics shows that 11 funds list RBS in their top-10 holdings, including the FE Alpha Manager Andrew Green’s
GAM Global Diversified fund.