Random Thoughts on The City, Wall St & Capitalism

There seems to be a school of thought that says UK banking stocks are really ex-growth, you only have to read some of the research notes that come out on Lloyds TSB to understand that. Yes the building societies that de-mutalised in the 1990s are offering current accounts up to 10% interest a year, just look at Alliance & Leicester and the Halifax. UK consumers are the most profligate in Europe, and have high personal debt ( excluding mortgage payments), personal bankruptcies are on the rise. The one bank I like the look of is Barclays, I think it reports Q3 earnings tomorrow. Why? Simple Barclays Capital. Barcap is the only investment bank left of any standing in the UK investment banking scene. Barcap will be Barclays' growth engine and seems to contribute an inordinate amount to Barclays bottom line. In historical terms its gone from nothing in 1997 to being a pretty significant player these days. But with the odd exception of media coverage on Bob Diamond in the trade rags and the newspapers , usually focusing on his pay, there seems to be little coverage of Barcap when Barclays is mentioned in the press. That's probably because retail banks like to give the image of being staid and stable and don't want shareholders to think they are playing poker with their money.Of course that's all investment banking is - a fixed poker game where the house always wins, basically because it cheats. The US investment banks have been reporting record earnings for the last three quarters ( look at Lehman, Merrill and the ever slippery Goldman ) , even European second liners such as Societe General have reported exceptionally good numbers.So why would Barcap be any different. As a play on investment banks with a stable retail client base and income stream Barclays looks like a good short to medium term trading play. It's 604 today.