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Qatar slashes stake in Barclays amid turnaround push at the bank

CS Venkatakrishnan
The Middle Eastern state’s decision to slash its support for Barclays is a blow for chief executive, CS Venkatakrishnan - Lam Yik/Bloomberg

Barclays’ Qatari backers are to halve their stake in the lender in the biggest share sales since the Gulf state rescued the banks during the financial crisis.

Qatar Investment Authority (QIA), Barclays second largest shareholder, on Monday launched plans to raise £510m through the sale of shares.

The transaction will cut QIA’s ownership of Barclays in half, reducing it from a 5pc stake to about 2.4pc.

Qatar has been a cornerstone investor in Barclays since 2008 when the Gulf Kingdom injected £4bn into the bank to help it avoid a state bailout. Barclays’ share price has halved since then.

QIA offered 362m Barclays shares for sale on Monday night – roughly 45pc of QIA’s 810m shareholding.

At its peak, Qatar owned over 1 billion shares in the bank. This week’s sale is the largest straightforward share offload since the Gulf nation first invested. In 2012, Qatar sold around 300 million warrants, which allow investors to buy Barclays shares at a certain price, worth about £740m to investment banks.

The Middle Eastern state’s decision to slash its support for Barclays is a blow for chief executive CS Venkatakrishnan, known as Venkat, who is currently overhauling the bank in an effort to boost performance.

Barclays plans to lay off up to 2,000 staff across its legal, compliance and HR divisions in a bid to save about £1bn of costs.

Its investment bank is also planning to axe thousands of unprofitable clients, including sovereign wealth funds, governments and large institutional investors. As many as 2,500 could be dropped.

Mr Venkatakrishnan hopes the overhaul will help boost Barclays’ share prices, which has fallen almost 10pc so far this year and underperformed rivals.

The Qatari sell-down comes at a bleak time for the global banking sector. Rating agency Moody’s on Monday issued a “negative” outlook for the industry in 2024, warning that losses were likely to rise sharply as high interest rates hit both households and businesses. High unemployment and low consumer confidence could lead to a sharp increase in “problem loans” in the UK, it said.

Lloyds Bank chief executive Charlie Nunn last week warned there was “nervousness” among international investors about backing European banks for fear of windfall taxes on the sector.

Investment bankers at Citi and Bank of America are handling the Barclays share sale, according to Bloomberg which first reported the news.

The stock was being marketed at 141p, a small discount to the 142.98p at which they closed on Monday.

Qatar is likely to remain Barclays’s second largest shareholder even after the sale as passive fund giants Blackrock and Vanguard are the bank’s first and third largest shareholders respectively.

Qatar first invested in the bank at the height of the financial crisis. Desperate to avoid a state bail-out like Lloyds Bank and RBS, Barclays struck a deal that triggered more than a decade of legal and regulatory recriminations.

The Financial Conduct Authority recently fined the bank £50m for “reckless” failures over its disclosure of fees paid to Qatar as part of the deal.

The QIA is also Sainsbury’s top shareholder and owns a string of assets across the UK.

Barclays is unusual in the UK banking sector for running a large US investment bank which competes with Wall Street titans like Goldman Sachs and Citi.

However, recent results show profits at the investment bank and consumer division have slid, while UK deposits have also dropped.

Its net interest margin, which measures its profitability, has also shrunk.

Mr Venkatakrishnan is expected to lay out the details of his restructure at the bank’s full year results in February.

Barclays currently employs 44,000 people in the UK and 43,000 in the rest of the world.

Staff at the bank’s Execution Services unit, which runs back office functions at the bank, are expected to bear the brunt of the cuts.

Barclays declined to comment. QIA was contacted for comment.

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