Barclays expects £450mn hit in US structured products unit

Barclays has delayed its £1bn share buyback programme because the British financial institution prepares to pay clients £450mn for losses made in its US structured merchandise enterprise.

The variety of structured securities Barclays issued in 2019 exceeded the extent of curiosity, which suggests the financial institution expects to pay clients £450mn to unwind the transactions based mostly on present market costs, the UK lender mentioned on Monday.

Barclays added that the loss would trigger a 0.14 share level hit to its frequent fairness tier 1 ratio — a measure of its potential to resist monetary misery — which might stay within the 13-14 per cent goal vary.

“The £1bn share buyback programme introduced on 23 February 2022 as a part of full-year 2021 outcomes is now anticipated to start in [the second quarter],” the financial institution mentioned.

“Barclays has commissioned an impartial overview of the details and circumstances regarding this matter together with, amongst different issues, the management atmosphere associated to such issuances. Individually, regulatory authorities are conducting inquiries and making requests for info.”

Joseph Dickerson, an analyst at Jefferies, mentioned the loss was “an unhelpful matter which has triggered an impartial overview across the management atmosphere”, including that “regulatory enquiries might weigh on sentiment”.

Barclays mentioned it registered $20.8bn in most combination providing of worth securities in August 2019, which exceeded the registered quantity by round $15.2bn.

The monetary providers group’s shares dropped greater than 2 per cent in early London buying and selling on Monday, bringing their decline for the yr to 12 per cent.