Barclays in Treasury debt talks

[David Guyatt]

I wonder if Barclays are negotiating for a zero government stake in the bank if the government decide to bailout their crap assets?

http://news.bbc.co.uk/1/hi/business/7945470.stm

Barclays in Treasury debt talks
Barclays has said it is in talks with the Treasury over its "potential" participation in the government's Asset Protection Scheme.

The bank said any decision on whether it would participate, "and to what extent", would be based on "the economic merits to shareholders".

The Asset Protection Scheme uses government money to insure banks' riskiest assets against further losses.

Lloyds Banking Group and RBS are already signed up to the scheme.

In exchange for gaining the insurance, they pay the government a fee.

The government currently insures £325bn of toxic assets at RBS, and £260bn at Lloyds.

Other banks have until 31 March to join.

Chancellor Alistair Darling hopes the Asset Protection Scheme will help restore confidence in the banking sector.

Sale talks

Barclays also confirmed on Monday that it had held talks over the potential sale of its iShares fund management business, but that no decision had been made.

ASSET PROTECTION SCHEME
Taxpayers underwrite banks' bad debts
Essentially an insurance scheme
Banks pay a fee to take part
Banks are liable for initial losses, similar to paying the excess on an insurance claim
"Barclays...confirms that it has held discussions with a number of potentially interested parties as part of its practice of regularly reviewing the group's portfolio of businesses," it said.

Reports have suggested any sale could raise up to £5bn.

Following the two announcements, shares in Barclays were up 11% or 8.5 pence to 82.6p.

Unlike Lloyds and the RBS, Barclays has stayed profitable amid the collapse of the financial markets.

The bank reported profits before tax of £6.08bn for the full year of 2008.

Last October, Barclays announced a proposal to raise up to £7.3bn to strengthen its balance sheet, mainly from the state investment funds and the royal families of Qatar and Abu Dhabi.

[Magda Hassan]

Wouldn't it be cheaper and more sensible to not bail out any of these banks or insurance companies and for the government to create its own bank and insurance company and for it to be run on debt free money? I know, a few bankers will be left behind but.... the rest of society will be so much better off. They can keep their banks and hedge funds but they have to wear the costs themselves.

[David Guyatt]

What an original thought - I wonder why the pols haven't considered it? :withstupid:

[Jan Klimkowski]

In its statement today, Barclays confirmed that it is talking to the Treasury and the Financial Services Authority about its potential participation in the asset protection scheme (APS), but said: "Barclays's decision whether, and to what extent, to participate in the scheme will be based on the economic merits to shareholders of any such participation."


Instead of turning to the government for aid, Barclays has raised billions from investors in Qatar and Abu Dhabi, who together now own almost a third of the bank.

http://www.guardian.co.uk/business/2009/...-fund-sale

The sheikhs have been conned. To mangle my metaphors, they've been sold a dead donkey by the snake oil salesmen.

I would imagine the sheikhs are not keen on seeing their shareholding diluted, and potentially subsumed, by UK government control.

However, in reality, like all the big banks, the supposed "assets" of Barclays are probably worth pennies on the pound if ever marked to market.

If the sheikhs are smart, they'll be screaming for a bailout by the British taxpayer. Unless they're being advised that the pound sterling is toast, and British government guarantees will soon be worthless.