The shares of Barclays Plc have dropped by almost four per cent after its top shareholder sold its remaining warrants in the bank.
The 3.7 per cent drop in the British finance giant’s shares came after Qatar Holding LLC on Monday monetised its remaining 379 million units of Barclays warrants – instruments that convert into shares.
“It has come off a week of solid gains, but month end flows may counter and support risk assets going into the end of the week“
– Ioan Smith,
The move will lead to the sales of up to 303.3 million shares in the bank.
The warrants were part of a controversial fundraising effort by Barclays at the depth of the financial crisis in 2008, when it raised billions of pounds from investors in Qatar and Abu Dhabi to avoid taking emergency funds from the UK government.
But existing shareholders said the terms offered to the new investors were too attractive, especially the warrants they were given as part of the deal.
Barclays is now being investigated by Britain’s Serious Fraud Office (SFO) and Financial Services Authority (FSA), which are scrutinising payments made by Barclays to Qatar as part of the 2008 fundraising.
Qatar is one of the world’s most active sovereign wealth funds, with assets of more than $100bn. It has snapped up significant stakes in industries ranging from mining corporation Xstrata to German sports car maker Porsche to oil giant Shell.
The latest development came as markets remained nervous over efforts to seal the latest debt deal for Greece.
Eurozone officials have said ministers are likely to conclude a deal on Monday to allow the payout of the latest tranche of European and IMF aid for Athens, although they still have to resolve a shortfall in its debt-cutting efforts.
“There’s still a lot of negativity surrounding Greece, and with the Barclays deal on the table, its going to impact the FTSE itself, given that people start to price in the placing,” Ioan Smith, strategist at Knight Capital, said.
“It has come off a week of solid gains, but month end flows may counter and support risk assets going into the end of the week.”
Monday’s weakness on the FTSE 100 came after the index posted the biggest gains of the year last week – and five consecutive sessions of rises for only the third time this year – on renewed optimism that international lenders would come to an agreement over the release of the next tranche of aid to Greece.
Trade was cautious ahead of the eurozone meeting, at only ten per cent of its average 90 day volume, after what is usually one of the busiest trading periods of the day.
“In terms of broad risk appetite, the downside should be fairly limited today, as we await any news on the Greek talks,” said Jack Pollard, analyst at Sucden Finance.
“Should we see some sort of package for Greece announced, we’ll likely see these dips in financials bought.”