The financial engineering of Marcus Agius

Barclays chairman Marcus Agius has appeared on the front pages of leading British newspapers. The man has never sought publicity or greatness; he has been pushed to the front line because he has already achieved financial engineering feats which promise to save not only Barclays, but also the UK as a world financial centre.

Capitalism needs a leader with a successful track record. Wall Street has definitely - at least for the time being - lost all claims to be the world's financial leader. It is now clear that the US authorities, and in particular Hank Paulson of Goldman Sachs fame, were wrong to let Lehman go under.

That was the spark which finally ignited the world financial gunpowder keg, and sent capitalism down to its last October lows. It was a decline in ethics which destroyed communism in the Soviet Union. Where was the zeal and love of country which animated the World War II heroic defenders of Stalingrad? Reciprocal distrust has now fallen like a dead weight among the world's bankers, to the point that they do not trust each other's balance sheet. Banking depends primarily on trust, to a greater extent than on money.

Banker malfeasance, or wrongdoing in a position of trust, had become the order of the day. It was gambling, the Financial Times declared, which broke the banks. Last Monday, British prime minister Gordon Brown unequivocally accused the Royal Bank of Scotland (RBS) of having gambled away £50 billion of its money. RBS had taken part, along with Santander and Fortis, in the unholy acquisition of ABN Amro.

This inglorious piece of financial engineering made Agius flinch. He withdrew from the ABN Amro contest. As a banker, he has certainly Rothschildian panache (he married into the family 37 years ago).

The Rothschilds have had more than a mere philistine love of money. They acquired riches so that they could serve higher purposes in philanthropy, the arts, and not least in the highest forms of financial engineering.

They have been rich enough not to be ever besmirched by financial scandal of any kind. This has provided a strong base for Agius to be welcomed by the British Prime Minister at Chequers.

He was the first among a delegation of bank chairmen trying to engineer a way out for the UK from the ethical banking morass into which a man like Bernard Madoff, and his Wall Street friends, had led the world. Agius declared a long time ago in Institutional Investors magazine that although he was a conventional engineer by profession, he had made financial engineering his activity of choice.

Let not the Maltese investor be frightened by what has been happening on Wall Street and the City during the past week.

The build-up of this crisis has given a chance for Philip Manduca to sell his Titanium Investments to JP Morgan and Lehman. I do not think he did it to lose money.

The proof of his success lies in his doubly welcome reception on Bloomberg in top viewing time. He comes forward with a lion's glare in his eyes, and with a stentorian voice spells out his economic advice.

The new Manduca financial organisation is centered on currencies, and particularly on gold. His words are very much the embodiment of the recent Barclays strategy. Manduca is saying that the main future of the UK is as a financial centre. Can the UK import labour as billionairess Gina Rinehart in Australia is trying to do? A case in point is the Abu Dhabi money which has been engineered into Barclays by Agius.

Barclays has now taken up a courageous strategic stand. The big mistake in this financial meltdown was made when US Treasury secretary Paulson refused to bail out Lehman. This turned a difficult financial situation into a rout.

There is now almost universal consensus on this point. Barclays moved in and bought in a fire sale a strategic part of Lehman, including the 37 storeys of Wall Street office space.

Barclays is rightly telling the British government: We want your guarantee, but we want to pay you with cash, not equity. Barclays has plenty of cash.

The government nationalisation would effectively wipe out shareholders' money. Civil servants cannot become bankers overnight. They have been re-born again.

Mr Azzopardi Vella, economic consultant with DBR Investments Ltd, has promoted the Malta Development Fund and advised S and P.

johnazzopardivella@hotmail.com