Barclays’ shares down on buyback delay
Barclays' shares fall after the bank puts back its share buyback programme. Is this a buying opportunity?
Barclays shares fell 4% on Monday after the company revealed it would have to delay its share buyback scheme. The UK banking giant was forced to halt the £1bn programme after it took a £450m hit on a $15bn historical trading error.
In August 2019, Barclays mistakenly issued $15.2bn more in exchange traded notes in the US than the $20.8bn it had registered to. The bank says it will rectify the error, which relates to its VXX and oil notes, by buying them back from clients at the original purchase price. The notes mimic Vix volatility futures and crude oil price fluctuations.
“Barclays has commissioned an independent review of the facts and circumstances relating to this matter including, among other things, the control environment related to such issuances,” the company said in a statement. “Separately, regulatory authorities are conducting inquiries and making requests for information.
“BBPLC intends to file a new automatic shelf registration statement with the SEC as soon as practicable. Barclays remains committed to its structured products business in the United States.”
Barclays’ trading blunder
The bank is currently under investigation by the US Securities and Exchange Commission for the trading error. Barclays says the hit will also affect the bank’s common tier 1 ratio – a measure of its financial financial stability.
Meanwhile, the share buyback programme has been rescheduled to begin in the second-quarter, management said. Commentators say that the situation will represent a major test for new chief executive C.S. Venkatakrishnan, who was previously responsible for heading up Barclays’ global markets and risk operations.
Joseph Dickerson, an analyst at Jefferies, said it was “an unhelpful matter” and that the regulatory scrutiny was likely to “weigh on sentiment”.
Stake sell-off hits Barclays’ shares
In a further blow, on Monday evening an unnamed investor sold off a £900m holding in the bank, sending the shares down as much as 6% in early trading on Tuesday. The stake was thought to be worth around 3.6% of Barclays share capital and the shares were sold at a discount, according to financial market data firm Refinitiv. Shares finished trading down 3% to 156p.
Analysts at JP Morgan Chase also downgraded the shares to neutral, cutting its price target from 220p to 170p.
Barclays’ shares have fallen 28% this year in the wider market sell-off since reaching a high of 217p in January. Full-year and fourth-quarter results for 2021 beat analyst expectations. Yet, Venkatakrishnan struck a more cautious tone for the year ahead at the results.
“Looking ahead into 2022, we are focussed on delivering consistent performance and returns across our businesses, supported by robust management of our balance sheet, costs and controls,” he told investors.
“We recognise that the economic environment is more than usually uncertain, with rising inflation rates and tighter monetary policy, while many parts of society continue to recover from the severe social and economic effects of the COVID-19 pandemic.”
Investors will hear more at the bank’s first-quarter results due in late April. However, for now, the share price slump offers a long-term buying opportunity.
Go short and long with CFDs on 16,000+ shares with Singapore’s No.1 platform.* Learn more about trading shares with us, or open an account to get started today.
*Awarded the Best Online Trading Platform by Influential Brands in 2021.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.