Barclays Expects to Take a $591 Million After-Tax Loss

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Barclays Expects to Take a $591 Million After-Tax Loss
29 Mar 2022
7 min read

News Synopsis

Barclays PLC has said that it is buying a slug of structured notes at a loss of about $591 million after it sold too many of them. Structured notes are a type of debt certificate associated with underlying references such as the S&P 500 and oil. The British Bank has registered with the United States Securities and Exchange Commission to sell up to $20.8 billion of these bonds. The company said it exceeded the cap by $15.2 billion.

Barclays is conducting a review of the matter. Regulators are also conducting inquiries and making requests for information, the bank said. The bank is delaying the start of its £1 billion share-buyback programs to the second quarter. 

Barclays goes beyond the so-called shelf registry, which allows issuers to split the sale of some of their bonds without seeking regulatory approval each time. The limit is usually preset in the bond prospectus and can be extended.

Structured notes holders include private individuals and funds. Barclays needs to buy the notes at the original purchase price. Estimated losses indicate that a significant portion of the debt is currently trading below this level. In fact, Barclays lurks on the notes more than it appears. Bank calculations include tax deductions related to losses.

Barclays highlighted the issue of some exchange-traded notes a few weeks ago when it stopped selling or issuing the iPath Pure Beta Crude Oil ETN with a maturity of 2041 and the iPath Series B S&P 500 Vix ShortTerm Futures ETN with a maturity of 2048. At that time, banks stated that they were not capable enough to support further sales or issuance.

The company said that the loss will dent its common equity Tier 1 ratio, but it is expected to remain within the bank’s target range of 13% to 14% on March 31. 

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