Thursday, January 22, 2009
Has greedy John Varley unwittingly sold a majority stake in Barclays for a song?
While Barclays' main British rivals, Royal Bank of Scotland, HBOS and Lloyds TSB, were forced to go begging to the British Government for assistance, Barclays persuaded the royal families of Abu Dhabi and Qatar, and the sovereign wealth fund of Qatar, to stump up £7 billion. They agreed to wait seven months for conversion to shares at a price of 153p. However, if at any time before 30 June, Barclays raises more money at a lower price, the Arabs can exchange their notes. As Barclays shares have since slumped to 66p, they could almost triple their holding - which would give them around 55 per cent of the British bank. For Barclays, the UK provides more than 50 per cent of its earnings. The rapidly weakening UK economy has made its condition even more fragile.