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March 6, 2009

Uncomfortable week for Barclays

by Gill Montia

Story link: Uncomfortable week for Barclays

Barclays’ share price came under pressure this week on reports that the group could face major losses during 2009 and 2010.

According to accounts from The Daily Telegraph and Reuters, the bank could have dangerous exposures to structured credit and monoline insurers.

The intelligence is based on a report from Panmure Gordon, which specialises in corporate and institutional investment banking and stockbroking services.

The firm’s analysts, Sandy Chen, is predicting that if corporate defaults rise and structured credits are downgraded further, the structure of Barclays’ swaps with monoline insurers and others could result in large impairment charges and writedowns.

With this in mind, Panmure is forecast impairment charges of around £13 billion in 2009 and 2010, which it expects to push Barclays into major losses both this year and next.

The bank is also being asked questions in connection with its acquisition of certain Lehman Brothers assets last year.

According to a report in the Financial Times, Lehman Brothers’ US liquidators, Alvarez & Marsal, have concerns about a sum of money transferred to Barclays to cover Lehman Brothers’ liabilities, including bonus and severance payments.

Barclays has responded by saying that all matters were approved by the New York bankruptcy court in September of last year.


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