Barclays Faces Share Slide as Qatar Holding Trims Stake in Strategic Shift

Shares in Barclays took a 2% hit as Qatar’s sovereign wealth fund, Qatar Holding, initiated a sell-off, slashing its stake from 5.3% to 3.2%.
The move comes ahead of Barclays’ upcoming strategy reveal, aiming to improve performance, while the bank grapples with investor pressure and historical legal scrutiny over financial arrangements with Qatar.

Shares in Barclays experienced a setback on Tuesday as Qatar’s sovereign wealth fund, Qatar Holding, initiated a substantial sell-off of its stake in the renowned British bank. The move, involving the sale of 362 million shares valued at approximately GBP 510 million ($657 million), aims to reduce Qatar Holding’s stake from 5.3% to 3.2%, as reported by Reuters.

This development unfolds just weeks before Barclays is set to unveil a new strategy in February 2024, designed to enhance its performance and bolster profitability. The shares took a 2% hit on Tuesday, compounding an 11% loss over the past 12 months, signaling a challenging period for the banking giant.

Qatar Holding opted for a strategic sell-off, disposing of shares at 141 pence, marking a 1.4% discount from Barclays’ closing price on Monday. The move by Qatar comes amid mounting pressure on Barclays to revitalize its financial performance, particularly in the wake of lackluster results attributed to a slowdown in its investment banking division.

CEO C.S. Venkatakrishna, popularly known as Venkat, is steering the London-based bank toward a cost-cutting plan of up to GBP 1 billion. This initiative may include the reduction of 2,000 back-office staff in Barclays’ operational support division, Barclays Execution Services or BX.

Venkat faces intensified scrutiny as Barclays’ share price has declined by 28% since he assumed the role in November 2021. The sell-off by Qatar Holding, a fully-owned subsidiary of the Qatar Investment Authority (QIA), has implications beyond the financial market, with significant potential to influence the bank’s strategic decisions.

Navigating Challenges – Barclays’ History with Qatar and Legal Scrutiny

Barclays’ ties with QIA trace back to the 2008 financial crisis when the Qatar Investment Authority became the bank’s largest shareholder following a GBP 4 billion bailout. However, the financial arrangements between Barclays and QIA attracted legal scrutiny, leading to a criminal investigation by the U.K.’s Serious Fraud Office (SFO).

The investigation focused on allegations that Barclays paid QIA secret fees in exchange for the cash injection, which helped the bank sidestep a government bailout. Despite a criminal court dismissing the charges in 2018, Barclays faced a GBP 50 million fine from the U.K.’s Financial Conduct Authority (FCA) in 2022 for failing to disclose the financial arrangements with QIA during the 2008 bailout.

As Barclays navigates through this challenging period, the strategic decisions taken in the coming months will not only shape its future performance but also define its relationship with key stakeholders and investors.