Barclays to start buy back $17.6b of wrongly sold notes

Bloomberg

Barclays Plc will start to buy back as much as $17.6 billion of securities, a process that should determine its losses from a paperwork blunder that saw it accidentally sell more structured and exchange-traded notes than it had registered.
The bank said the repurchase period will start on August 1 and will expire on September 12, according to a statement. Barclays separately said it plans to resume the issuance and sales of some iPath exchange-traded notes, which had been suspended in April.
In March, the bank said it had issued billions more securities than it had registered with the Securities and Exchange Commission. The error requires the firm to offer to repurchase affected securities at their original price under a so-called rescission offer.
Barclays said at its first-quarter results that it has taken charges of £540 million ($651 million) relating to the matter. The flub also saw the bank delay a billion-pound share buyback, suspend the sales and issuance of dozens of exchange-traded notes and halt market-making activities in its own debt securities.
Chief Executive Officer CS Venkatakrishnan said that the situation was an “entirely avoidable” mistake.
The lender is due to publish its second-quarter earnings on July 28 and some analysts expect to see further costs from the repurchase process.
“Relative to consensus we are more cautious on revenues and on costs,” Citigroup Inc. analysts said in a note. “This may reflect the treatment of rescission losses.”
Barclays said that the provision was sensitive to equity market movements and a 5% reduction in the S&P 500 index would lead to roughly £300 million more in the pre-hedged provision.
However, this movement would be expected to be “substantially offset by the hedging arrangements,” the bank said.
A company-compiled consensus shows analysts expect a litigation and conduct charge of £949 million for the corporate and investment bank in the second quarter. That compares to a £17 million expense the unit reported for all of last year, according
to the bank’s 2021 results
announcement.
The paperwork blunder has been called “basic”, “bizarre” and “embarrassing” by analysts. Major banks typically apply for blanket registrations that allow them to regularly issue notes that give clients a chance to bet on everything from market volatility to the performance of particular shares.