A banker
PORTFOLIO JOHN BULL
As a shareholder in Barclays Bank I whole- heartedly approve of the massive realignment of British banking which has been announced over the past fortnight. Barclays and Lloyds are both predominantly south country banks. So their union should provide some useful in- tegration to the benefit of profits. It is worth listing those counties where the new Barclays group would have over 60 per cent of the exist- ing outlets: they are Cambridgeshire, Corn- wall, Huntingdon, Norfolk, Rutland, Suffolk and Wiltshire. And where the overlap is Barclays/Martins rathgr than Barclays/Lloyds, that is in Northumberland and Durham, group coverage goes beyond 70 per cent.
If the Monopolies Commission is prepared to tolerate this, then we can expect to see quite a few closures. Barclays and Co. could put the 'for sale' signs on eighty or so branches each year. Further savings should come from a more flexible use of staff, together with more eco- nomical use of computers.
I had hoped that the current round of mergers would force the banks to disclose their true profits. Shareholders should not be asked to approve schemes without knowing what their businesses are worth. Unhappily, however, I detect a stubborn resistance to disclosure among bank chairmen. All the same, if the Midland, at present shut out of any deal at all, should resolve its situation by openly bidding for either Martins (though too small and too local for its needs) or Lloyds (an unwilling though ideal partner), the secrecy of banks about their own assets and earnings would be the first casualty.
What the three bank chairmen concerned will tell the Monopolies Commission is that their merger makes most sense in overseas terms. They will say that in areas where at one time British banking was unchallenged, competition is now intense. In international banking size is important. I quote from their joint statement: `it is a strong domestic base which permits the inevitable risks to be ac- cepted. Further, size of itself attracts business.'
If that is the case, then it seems to me en- tirely likely that the clearing banks will want to take their overseas associates more fully into their groups. I am thinking in particular of National and Grindlays, where an ambitious and able chairman. Lord Aldington, has long been aware that, to survive in the top league of international bankers, National and Grindlays will have to acquire smaller units or itself be taken over. Lloyds Bank has 25 per cent already of the National and Grindlays equity, so it is clear from which quarter a bid is likely to come. I do not, however, think that the current share price pays much attention to their possibilities, SO I have bought one hundred shares at ,55s,• where dividend yield is a uSeful 4.6 per cent. I
have not forgotten that two months before Lloyds bid for the National Bank of New Zealand at 54s 2d a share, the shares stood at 44s. Similarly the Bank of West Africa stood at 28s before the Standard bid 58s.
National and Grindlays has a surprisingly good record. Two years ago, profits almost doubled and the dividend was raised from 15 per cent to 17 per cent. Last year a revaluation of properties was announced—to show the authorities in countries where it operates that it has considerable assets at stake, to improve its negotiating position where nationalisation threatens and to raise the stakes in merger talks. For the time being, National and Grindlays is concentrating on expanding the scale of its London activities. The basis for this is the two thirds interest it acquired in William Brandt's Sons and Co. in 1965.
Valuation at 14 February 1968
100 BAT at 102s 9d xd £514
100 Empire Stores at 60s 6d £302 50 Phoenix at 183s 9d .. • • £459 225 Lyle Shipping at 19s 10-1d £224 600 John I. Jacobs at 7s 101c1 . • £236 100 Unilever at 48s 9d .. • • £244 £2,000 War Loan at £49+ .. • . £990 150 Witan at 33s lid .. • • £249 100 English Electric at 56s 9d .. • • £284 100 E. Scragg at 59s 6d .. • • £297 250 John Brown at 36s 6d xd .. • • £456 lob Barclays Bank at 72s 3d £361 200 Throgmorton Secured Growth (Capital) at 16s Rd £161 100 National and Grindlays Bank at 55s £275 Cash with local authority at 7-4- per cent £380 £5,432 This week's expenses £6 Previous expenses £86 Deduct: expenses £92 Total £5,340
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