The price achieved for this business is but a fraction of the amount spent by Barclays building it up from the mid 1980s onwards.Earlier this year Barclays’ share price was being talked up on the back of estimates that the investment bank could be flogged off for more than pounds 2bn. Admittedly, the bits CSFB finally bought only represent around a third of the whole of BZW, but even so this is a dismal price.CSFB emerges as a real winner, catapulting itself into the European big league in equities and advisory work for a snip. It deserves real plaudits for the way it played its cards, waiting for its main US rivals to abandon the chase so that in the end it was able to dictate its own terms.What now for Mr Taylor? A charitable view of the deal was that it was the least-worst option. By general consent, it was the right deal but it came two years too late and was bungled disastrously. This is not a transaction likely to feature much in the promotional literature of Goldman Sachs, which handled the sale.
To put the price in context, Barclays is receiving about the same amount for the pretty substantial businesses it has sold to CSFB as NatWest paid for Hambro Magan, the little corporate finance boutique it snapped up recently during its own misguided foray into investment banking.

While it could fairly be argued that NatWest was more than a little generous to George Magan and chums, the comparison is none the less an unflattering one. Nor is it any surprise that Martin Taylor, Barclays’ chief executive, has been looking so frazzled of late. According to the rueful calculation of one disgruntled employee last night, BZW’s equities and corporate finance arms were sold yesterday for rather less than half their annual revenues. It is a terrible blow for Mr Taylor, whose cool, intellectual approach to business has been cruelly tested by the execution of this disposal. That makes the investment bank probably Britain’s cheapest company. With negotiating skills of the type brought to bear on the disposal of BZW, it is amazing Barclays lasted as long as it did in the game. The French group is Europe’s largest computer services company, employing 27,000 people including 5,500 in the UK.
The size of the deal is further evidence of a growing demand for computer experts to run essential and increasingly complex IT services.

Cap Gemini’s contract, which begins in March 1998, was won from EDS, the US computer services company much maligned by Private Eye.British Steel originally gave the contract to IBM in February last year, before terminating the deal in January this year, reputedly because of IBM’s concerns over margins on the contract.. Barclays is right to get out of investment banking, for plainly it has little talent for the fast-buck, wheeler-dealing attributes of this extraordinary industry. The contract is to outsource British Steel’s entire computer support over the next 10 years and develop a new range of IT services. It will initially involve the transfer of more than 600 British Steel IT staff to Cap Gemini. “CU shares have been buoyed by recent takeover speculation,” said one analyst.

“I think a [share] price nearer to 700p would be more reasonable,” added another.- Lea PatersonInvestment column, page 27. British Steel has awarded a pounds 500m contract, the biggest computer contract ever signed in the private sector, to the French IT company Cap Gemini. Investors in Commercial Union were yesterday disappointed by the insurance company’s latest financial results. At prevailing exchange rates, profits for the nine months to September grew a pedestrian 3 per cent. The results contrast with figures earlier this week from the rival General Accident, which announced a 23 per cent jump in profits.

CU shares fell 7 per cent yesterday to 745p.
The strong pound was partly to blame. Under constant exchange rates, operating profits for the group grew 15 per cent.Though performance was strong in the life sector, which accounts for just under half of CU’s business, general insurance had a difficult time. The UK underwriting operation has lost pounds 85m so far this year.Despite yesterday’s tumble in CU shares, analysts’ remained pessimistic. If supported, detailed integration planning could then begin, but implementation will wait until it is known whether the regulators have announced their approval.People & Business, page 28. Pointing out that the accountancy profession had become unstable, he predicted the forming of alliances, joint ventures and other arrangements. In addition, certain offices or practice areas might opt to leave one big firm for another or go out on their own.