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Barclays Director Admits Pledging Bank's Shares To Secure Loan

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http://www.guardian.co.uk/business/2009/ja...shares-for-loan

Barclays' Frits Seegers is among a number of top directors at blue-chip companies forced to admit they had used tranches of shares in their employers' companies to secure large personal loans.

Seegers, Barclays chief executive of retail and commercial banking, appears to have pledged almost his entire personal shareholding in Barclays as security against a loan likely to be about £1m, which he took out in April 2007.

Seegers, a Dutchman who joined Barclays in 2006 after a 17-year career with Citigroup, is thought to have taken out the loan to buy more Barclays shares on 2 August 2007 – weeks before the onset of the credit crunch.

On 2 August he bought 140,000 shares at £6.80 – worth about £950,000. They now have a value of £82,600.

The stockmarket announcement today showed he had pledged 896,364 Barclays shares on 1 August 2007. But it is understood that this is not the original number used. The number of shares pledged has increased as the share price of Barclays has fallen. It now represents almost his entire shareholding in the bank, which would have been worth almost £6m in August 2007 and is now valued at only £540,000.

Seegers, who is married to Kartika Sukarno, the daughter of the late President Sukarno of Indonesia, was hired by Barclays to beef up its retail and commercial businesses after a series of high-level departures from the board.

The disclosure about his position was made a day before a deadline set by the Financial Services Authority for businesses to reveal whether their shares have been used as collateral by any of their directors.

The City regulator introduced the disclosure amnesty after David Ross, co-founder of Carphone Warehouse, admitted he had used stakes in four companies where he was director as collateral for loans without telling fellow directors. Though Ross resigned his boardroom posts, the FSA took no action because it felt its rules were unclear. It then gave other directors until the end of this week the opportunity to come clean.

It is thought that Seegers told his fellow directors he had used the shares to secure a loan shortly after the FSA issued its guidelines after the Ross affair.

The revelation could not come at a more difficult time for Barclays, which has been hammered on the stockmarket since last week amid rumours it faces nationalisation or potentially catastrophic write-downs. On Friday it lost 25% of its value and was forced to issue a trading statement after the market closed to insist it expected to report at least £5.3bn of profits for 2008. But this has failed to improve sentiment and its shares have continued to fall.

Seegers, who has an engineering degree from Delft University of Technology, said around the time of his appointment that "when there is a crisis I get very calm". ( :lol::lol::lol: )

About 50 businesses have revealed similar loan arrangements, and yesterday drug company AstraZeneca, credit-rating agency Experian, publisher Daily Mail & General Trust, oil and gas group Petrofac and emergency cover and repair group Homeserve were among those joining the list.

DMGT's announcement appeared to indicate that Viscount Rothermere, the majority shareholder and chairman of the company, had pledged more than 8m shares in December 2006 as security for a loan of an undisclosed amount.The recent slide in Barclays shares coincided with the lifting last week of the ban on short selling of financial stocks, introduced last September to protect HBOS at the height of the banking crisis.

When the ban was lifted the FSA demanded that hedge funds taking out bets that a company's shares would fall should disclose their position to the market. Lansdowne was the only one to admit doing so and yesterday revealed it had a made a profit of potentially £12m in the space of four days.

How can you not love these financial types, eh?

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But wait! He has an Engineering Degree!

On HPC, these people are Gods and it'd be much better if they ran things......oh, ok.

Media Studies for Chairman of The Board, anyone?

:P

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Well, at least he believed his own bull$hit.

[/quote

and he backed it up with shares to secure a loan ... :huh::o these people are experts i heard or read some where !!! :lol::lol:

you couldent make it up what went on in the banks & city...now bail outs... :angry:

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It now represents almost his entire shareholding in the bank, which would have been worth almost £6m in August 2007 and is now valued at only £540,000.

Never mind Frits. Have a schmoke an a pancake.

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http://www.guardian.co.uk/business/2009/ja...shares-for-loan

How can you not love these financial types, eh?

Can you please explain to me why this is a problem.

I can see that from some complicated corporate governance pov it might be an issue.

But from a man in the street pov, what on earth is the problem with someone using some security that they own to secure a loan. Everybody does it.

ISTM that the headlines (and articles) are written in a way that suggests Mr Director has been to his office cupboard and borrowed some shares as this security, but he hasn't, he has used shares that he has paid for.

tim

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Can you please explain to me why this is a problem.

I can see that from some complicated corporate governance pov it might be an issue.

But from a man in the street pov, what on earth is the problem with someone using some security that they own to secure a loan. Everybody does it.

The problem is that the loan can be called in at any time.

For example, David Ross, director at Carphone Warehouse, pledged 136m shares (worth around £500m last year) of his shares in the company in order to fund to purchase of commercial property. Obviously, commercial property has gone t!tsup and he is in negative equity on the deal.

If he gets a margin call or if the loan is called in because the bank is struggling and needs more capital, suddenly the market is flooded with with 177m shares for sale, driving the price down big-time for existing shareholders. This is why such deals must be declared.

Edited by Little Professor

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The problem is that the loan can be called in at any time.

For example, David Ross, director at Carphone Warehouse, pledged 136m shares (worth around £500m last year) of his shares in the company in order to fund to purchase of commercial property. Obviously, commercial property has gone t!tsup and he is in negative equity on the deal.

If he gets a margin call or if the loan is called in because the bank is struggling and needs more capital, suddenly the market is flooded with with 177m shares for sale, driving the price down big-time for existing shareholders. This is why such deals must be declared.

I can see that GBP 500 million is a problem, but GBP 1 Million of major bank shares (up until a few months ago) wouldn't even have a noticable effect on a day's trading

tim

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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