Barclays

So much for Sheikh Mansour bin Zayed al-Nahyan being a long-term investor in Barclays. When the UK bank tapped Gulf investors last year, trampling on shareholders’ pre-emption rights in its haste to avoid a government bail-out, it justified the breach of corporate governance protocol by saying it would gain access to valuable “strategic and commercial relationships” in the Middle East.

News that some of these Gulf investors are now looking to cash out of a large part of their holdings will embarrass the Barclays top brass and possibly ignite a new burst of shareholder irritation with John Varley and Marcus Agius, the bank’s chief executive and chairman.

Yet in reality any such decision to exit is hardly surprising. The sharp recovery in Barclays’ shares from their January trough of 47p, when concern about the bank’s future was at its peak, to Monday’s 317p has made profit-taking hard to resist. But there may be other reasons why investors want to pull back slightly. Not only is Barclays’ balance sheet cleansing far from complete, but the Financial Services Authority’s murky stress test of the bank’s trading book has yet to prove a convincing guarantee of financial health. The sale is a sign that important investors do not believe the UK’s tests have been robust enough.

Furthermore, the adverse feedback loop from the financial world into the real economy is still taking effect, with no convincing evidence that a sustainable recovery is yet under way in developed countries. The fact the recession probably has much further to run, combined with continuing uncertainty over the locus of power in UK financial regulation, makes this a good moment to trim exposure to a bank stock that has overshot. Since Sheikh Mansour called the bottom, he has probably doubled his £2bn investment. His decision to cash out now, even only in part, will leave others tempted to follow suit.END