Barclays Declines After Qatar Holding Sells Its Remaining Warrants

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The stock price of Barclays PLC (LON:BARC) (NYSE:BCS) dropped by more than five percent, to $15.44 per share during the morning trading on the New York Stock Exchange, after reports that Qatar Holding sold its remaining warrants in the British bank

According to the statement of Qatar Holding, its decision to monetize its remaining 379 million units of Barclays warrants was part of its active portfolio management. The transaction did not affect the Qatar Holding’s investments in the ordinary shares of Barclays. The firm remained the largest shareholder, with a 6.65 percent stake in the British Bank.

Ahmad Al-Sayed, chief executive officer of Qatar Holding said, ‘We remain a supportive strategic investor in Barclays PLC (LON:BARC) (NYSE:BCS), and maintain our confidence in the long term prospects for the business.”

On the other hand, Anthony Jenkins, group chief executive officer of Barclays PLC (LON:BARC) (NYSE:BCS) said, “Barclays welcomes Qatar Holding’s message of confidence in its long term prospects and continues to appreciate the consistent support it has received since Qatar Holding became its largest shareholder.”

Qatar Holding purchased the warrants during the 2008 financial crisis, which are convertible to stocks. The firm raised $1.2 billion after selling the converted shares. On Friday, Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) and Goldman Sachs Group, Inc. (NYSE:GS) sold 303.3 million shares of the converted stocks at 244 pence per share, 4 percent lower than the closing price of Barclays stock on Friday.

A report from the Financial Times cited that Qatar Holding decided to cash in its remaining warrants, following reports that some investors demanded that Jenkins to break up the investment banking division of Barclays.

Analysts from Cannacord Genuity believe that the market is skeptical that BarCap could operate as an independent entity. The analysts said, “Any structural change or improvement in disclosure could provide the market with confidence that BarCap can standalone, and should, therefore, be directly reflected in the Group’s valuation.” The analysts view Barclays as a tactical trading stock, rather than a fundamental investment, due to lack of visibility within BarCap.

Qatar sold its stockholdings in Barclays PLC (LON:BARC) (NYSE:BCS) worth 1.4 billion pounds in 2009, after converting the warrants it acquired in 2008, while Abu Dhabi sold its warrants in 2010. Abu Dhabi is one of the biggest shareholders in the British bank.

Last August 29, Barclays PLC (LON:BARC) (NYSE:BCS) revealed that the FSA conducted an investigation in connection with the fees paid to Qatar in a commercial transaction between the companies in June and November of 2008. The investigation was launched after the bank released its financial results on July 27.

In a statement last August, the British bank said, authorities were investigating the “payments under certain commercial agreements” between Barclays PLC (LON:BARC) (NYSE:BCS) and Qatar.

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