British bank Barclays (BARC.L) disclosed on Monday an estimated 450 million pound ($592 million) loss on mishandled structured product sales and said this meant it would now delay a share buyback.
The lender said it offered and sold nearly twice as many affected securities over a period of about a year as it was registered to sell in the United States, overshooting its $20.8 billion limit by $15.2 billion.
The securities would now have to be bought back at their original purchase price, the bank said.
The products were two exchange-traded notes linked to crude oil and market volatility , a source familiar with the matter told Reuters. The bank suspended sales and issuance of the notes this month. read more
The bank said its “best estimate at this time” was that the loss would amount to 450 million pounds, cutting its core capital ratio down to the middle of its 13-14% target range. The loss estimate did not include tax.
Barclays said it would delay a planned 1 billion pound share buyback until the second quarter, adding that it had commissioned an independent review of the matter.
Regulators were also conducting inquiries and requesting information, the bank said.
Shares in the bank were down 3% in early trading.
Barclays’ wider investment bank had previously proved a stellar performer for the group over recent years, helping it post a record annual profit for 2021. read more
Analysts at Shore Capital said in a note that the bank appeared to be “tripping over its shoelaces”.
While the current share buyback has only been delayed, the error could reduce future capital distributions to shareholders by the bank, the analysts said.
($1 = 0.7604 pounds)
Reporting by Iain Withers; Editing by John O’Donnell and Edmund Blairc