Barclays delays share buyback after selling more bonds than it registered

Barclays pushed back its £1bn share buyback programme on Monday, as it announced a £450m expected charge after issuing twice as many notes as it had registered for sale.

The FTSE 100 company’s Barclays Bank PLC (BBPLC) subsidiary offered and sold more structured and exchange-traded notes than it had registered “during a period of approximately one year”.

It said the overselling gave rise to a “right of rescission” among some buyers, requiring BBPLC to repurchase the oversold securities at their original purchase price.

“As a result, BBPLC has elected to conduct a rescission offer to eligible purchasers of the affected securities,” Barclays said in its statement on Monday.

Based on current market prices of the securities and the estimated pool of potentially-eligible purchasers choosing to participate in the offer, Barclays said it expected the rescission losses net of tax to be £450m, and its CET1 ratio to be in the middle of the 13% to 14% target range as at 31 March.

The bank said that reflected a 14 basis point reduction from the estimated loss, and a further 15 point reduction due to an increase in risk-weighted assets over short-term hedging arrangements designed to manage the risks arising from the rescission offer.

Barclays said the equivalent impact on BBPLC's solo-consolidated CET1 ratio as at 31 March was expected to be a reduction of 23 basis points for the estimated loss and 23 points for the hedging impact.

The company said the hedging impacts would reverse at the end of the rescission offer.

“The above represents Barclays' best estimate at this time of losses which may arise from these matters and will be reflected in Barclays’ first quarter 2022 results announcement.

“Barclays is also assessing the impact of these matters on prior period financial statements of BBPLC.”

Due to the proximity to its closed period, the £1bn share buyback programme announced on 23 February as part of its 2021 results was now expected to start in the second quarter, the bank said, following the publication of Barclays’ first quarter numbers.

“Barclays has commissioned an independent review of the facts and circumstances relating to this matter including, among other things, the control environment related to such issuances.

“Separately, regulatory authorities are conducting inquiries and making requests for information.”

Barclays said it would file a new automatic shelf registration statement for BBPLC with the United States Securities and Exchange Commission (SEC).

“Barclays remains committed to its structured products business in the United States.”

At 0826 BST, shares in Barclays were down 2.01% at 163.93p.