Barclays reels as Qatar dumps £500m of shares in 'accident prone' bank

It was hardly the Christmas present that the Barclays boss CS Venkatakrishnan wanted to unwrap.

The decision by the Qatar Investment Authority (QIA), its biggest shareholder, to sell around half of its stake is bound to raise questions about its direction ahead of a make-or-break shake-up early next year.

It sent shares as much as 4.5 per cent lower yesterday before recovering to close 2.5 per cent, or 3.52p, down at 139.46p. They have fallen 12 per cent so far this year.

Qatar’s move will do little to boost confidence in the bank’s chief executive, known as Venkat, as he prepares to announce a strategic review in February. 

It is now two years since he was brought in after the scandal-wrecked tenure of Jes Staley. Yet, Venkat has continued to be dogged by questions about the performance of its investment banking arm.

Dumped: The decision by the Qatar Investment Authority to sell around half of its stake in Barclays will raise new questions about its direction ahead of a shake-up early next year

And, with shares down by nearly a third since he started, that could mean the review becomes a totemic event for his tenure.

‘It needs to land well otherwise shareholders may get an itchy trigger finger,’ said Gary Greenwood, banking analyst at Shore Capital.

It is an ominous warning at a bank where a succession of previous bosses – Staley, Antony Jenkins and Bob Diamond – exited at a time not of their own choosing.

QIA’s sale of 361.7m shares at 141p each on Monday raised £510million. The sovereign wealth fund became the biggest shareholder in 2008 when it injected £4billion in a deal which helped avert a taxpayer bailout.

Victoria Scholar, head of investment at Interactive Investor, said: ‘Qatar is concerned about the outlook, and so is cutting its losses. 

Since 2008 the stock has shed almost 60 per cent. Venkat was brought in to provide a clean slate but its weak share price performance reflects investor concerns.’

Venkat found himself in the driving seat in November 2021 after the sudden departure of Staley, following a probe by regulators into Staley’s links with paedophile financier Jeffrey Epstein. 

There was no finding that Staley was aware of Epstein’s crimes, Barclays said at the time.

The bank said it had identified Venkat as an internal candidate more than a year earlier, promoting him to head of global markets. 

On his appointment as chief executive, it said the board was ‘confident that Barclays under his leadership will continue its strategic direction and improve performance’.

Up against it: Barclays boss CS Venkatakrishnan

Yet the share price has continued to drift amid a series of fiascos. Most notably, it was fined £286million by US regulators last year after a trading error when it offered £14billion worth of financial products that had not been registered for sale.

And Venkat has had health issues, undergoing five months of cancer treatment before returning to the office this year. Now, pressure is building as results fail to lift the mood.

In October, Barclays reported a 16 per cent fall in third-quarter profits to £1.6billion as it was hit by a slowdown in its investment banking arm.

Even the benefit from higher interest rates has started to wane. Banks make money on the difference, or margin, between the interest rates they pay depositors and the higher rates they charge borrowers.

But Barclays has cut its outlook for the margin as deposit customers seek higher interest accounts elsewhere.

Last month, it emerged that the bank, which employs 87,000 people worldwide and 44,000 in the UK, plans to slash as many as 2,000 jobs to save £1billion. 

But it is Barclays’ involvement in investment banking which means that, unlike rivals, it is exposed to the rough and tumble of market volatility as well as the slump which continues to grip corporate dealmaking worldwide – and prompted calls for change.

One analyst said: ‘You can’t get away from this: investors don’t like or don’t trust Barclays’ ability to run an investment bank.’ 

The continued problems of the investment arm, such as the blunder for which it was fined, keep taking a toll. 

‘Just when you think things are starting to get better, Barclays goes and shoots itself in the foot again. Investors think Barclays is accident prone,’ the analyst added.

Downsizing the investment bank, partly spinning it off in a New York listing or buying a wealth/asset management business could be the way to overcome doubts, the analyst said.

But, a report in the Financial Times said last week, it will instead look at dropping thousands of its investment banking clients. 

Shore Capital’s Greenwood said the plans ‘seem to be more of a gentle reshaping than a major restructuring’ and investors were perhaps ‘hoping for something a bit more structural’.

He added: ‘If it was easy to execute a break-up or significant withdrawal from investment banking while adding shareholder value, they would be doing that. Unfortunately, there are no easy answers.’