In a significant development, Barclays is facing an estimated $592 million (450 million pound) loss and regulatory scrutiny for exceeding a U.S. limit on sales of structured products, some of which have surged in popularity following the Russian invasion of Ukraine.
Barclays’ statement also mentions that it will have to delay a planned 1 billion pound share buyback as of the loss, which it will have to incur as a result of buying back the securities in question at their original purchase price.
Shares of the British bank closed down by 4% after the bank said it had 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.
In a note, analysts at Shore Capital noted, Barclays appeared to be “tripping over its shoelaces”. In their note analysts also pointed out that the non-compliance is likely to reduce future dividends by the bank.
As per a source, the products involved two exchange-traded notes (ETNs) linked to crude oil and market volatility; sales and issuance of both have been suspended this month.
The loss is likely to be bigger since it did not include tax.
Barclays said it would delay its share buyback until the second quarter of the year as a result.
Barclays said the securities were registered for sale in August 2019, adding that it would file a new registration with the U.S. Securities and Exchange Commission as soon as practicable.
($1 = 0.7604 pounds)