Barclays shares hit 12 year low in response to Middle East funding

Barclays shares hit 12 year low in response to Middle East funding



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On Monday, Barclays stocks closed down 4.1% at 171.5p after dipping as low as 156.1p, its lowest level since 1995. Brokers downgraded the bank in response to its controversial fundraising with Middle Eastern investors.

Its decision to seek £5.8 million from the Abu Dhabi royal family, the Qatar Investment Authority and the investment vehicle of the Qatari royal family, Challenger, instead of accepting a UK Government bailout might end up costing existing shareholders £3.2 billion, Merrill Lynch has estimated.

 

With a lack of “clawback” for the bank on convertible fares, plus included expensive warrants and fees, it said that the fundraising would result in a prolonged period of paying interest.

 

The decision to accept capital from overseas has sparked strong reactions as critics have slammed it as a cynical move to protect the bonuses of senior executives. Now Barclays has had to defend its choice of investors, saying it is about “self-determination and the ability to direct our own destiny.” 

 

However, the bank has refused to comment on whether the continuation of bonuses played a part in the decision to tap Middle Eastern investors.

 

Existing investors are angry that their holdings have been diluted by the bank paying too much in order to raise capital. Vince Cable, Liberal Democrat shadow treasury spokesman, has branded the move “a spectacularly bad deal for everybody but the Middle Eastern investors and the top executives of Barclays – who get to keep their bonuses.”

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