BP chairman Svanberg must prove he was right to dump Hayward

It will be a very different BP that the oil giant's beleaguered chairman Carl Henric Svanberg will find himself selling to investors when he speaks to institutional shareholders over the coming weeks following Tuesday's half-year results.

This time last year BP had announced a 30pc rise in replacement profits, driven largely by a $2bn reduction in cash costs. "We continue to steer a steady course through choppy waters," claimed chief executive Tony Hayward then.
On Tuesday, BP announced the long-trailed departure of Hayward alongside what is almost certainly the largest quarterly loss ever reported by a British company, following the explosion on the Deepwater Horizon rig that killed 11 workers and fractured the well. To help meet the $32bn bill, BP is to sell $30bn of the "family silver" in the coming months.

But while tens of billions of shares have changed hands during the turmoil of the last 100 days the top of BP's shareholder register appears to be remarkably stable – even if there has been substantial change at the bottom. Svanberg will find himself talking to some very familiar names this week, despite the huge turnover in BP shares.
According to data compiled by Citywatch four of BP's five largest shareholders – Blackrock, Legal & General and Norwegian and Kuwaiti sovereign wealth funds – haven't sold a single share despite the dramatic fall in the share price. The fifth M&G Investment Management has taken advantage of the near halving in the share price to actually increase its holding from 1.55pc a few days before the Deepwater Horizon rig sank in April to 1.76pc at the start of July.
There have, of course, been a few sellers. Scottish Widows, a top 10 shareholder, is among those to have trimmed their holdings. But – despite all the noise – US pension funds, including Calpers, have not been among them.
The relatively stable shareholder register is good news for BP. The company won't emerge from this crisis to find 40pc of the shares in the hands of hedge funds looking for short term gains – and demanding management action to deliver it.
But it may well be bad news for Svanberg. Hayward may have lost the confidence of US politicians and the public, but a number of institutional shareholders were standing by him, arguing that he had done the best of a bad job despite the barrage of bad publicity. Having unceremoniously dumped Hayward – against the wishes of many institutional shareholders – Svanberg has a lot to prove in the coming days. If he fails he will follow Hayward out of the door, sooner rather than later.

Richard Fletcher, The Telegraph 28-07-2010

Consort Money

Writers name

Richard Fletcher, The Telegraph

Advertisers Company:

Consort24

Advertiser's website:

http://www.consort24.com