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Date : May 17, 2022

Barclays hit by $590 million US market blunder and stake sale

Barclays has disclosed a costly compliance blunder after it sold more US securities than allowed by regulators.

Shares in Barclays fell as much as 6% in early trading on Tuesday, after one of its top investors offloaded stock roughly equivalent to a 3% stake in the lender.

The sale comes as Barclays grapples with a fresh compliance and risk misstep, after it disclosed an estimated £450 million ($589 million) loss on Monday due to overselling structured products in the United States.

Shares in Barclays had closed down 4% Monday after the bank said it oversold billions of pounds worth of the securities over a period of about a year, overshooting a $20.8 billion limit agreed with United States regulators by $15.2 billion.

The products involved include two exchange-traded notes linked to crude oil and market volatility, a source familiar with the matter said. Barclays suspended sales and issuance of both this month.

An unnamed investor launched a sales process for 575 million Barclays shares on Monday, facilitated by Goldman Sachs. The offering was priced at 150 pence ($1.96) on Tuesday, towards the top of the target range of 147.50 pence to 150.75 pence, but this still represented a discount greater than 6% to Monday’s closing price, heaping pressure on the share price.

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Barclays (BCS) shares opened down around 6%, near the sale price, before clawing back some ground. The stock was last down 4.3% at 153.5 pence ($2.00) at 02.27 a.m. E.T.

Top shareholders with around a 3% stake in Barclays include the Qatar Investment Authority (QIA) and Blackrock, according to Refinitiv Eikon data.

Blackrock (BLK) declined to comment when approached by Reuters on Monday, while QIA was not immediately available for comment.

Barclays said it would have to delay a planned £1 billion ($1.3 billion) share buyback because of the loss on US structured products, which it will have to incur as a result of buying back the securities in question at their original purchase price.

The regulatory blunder is an early test for C.S. Venkatakrishnan, the newly-appointed chief executive of Barclays, whose previous roles included heading the bank’s global markets and risk operations.