bonus fallacy

sabretoothtigger

Issuing any shares at that price low would have given us our first arab owned clearing bank

They have till end of march to raise money in order to take insurance on their toxic debt. Barclays argue they dont need the insurance and dont expect to be forced, if they are forced to issue new shares the price will at least half I'd say

Barclays PLC (BCS, $6.85, +$1.23, +21.88%) is offering to finance nearly the whole sale price of its prized exchange-traded funds business, people familiar with the matter say, as the U.K. bank struggles to shore up its capital and avoid government ownership. Barclays is offering to lend bidders, including U.S. private-equity firm Hellman & Friedman LLC, as much as 80% of the purchase price of its San Francisco-based iShares unit, the people said. Analysts estimate the iShares business could fetch as much as $4.5 billion. Barclays shares jumped 19% premarket to $6.71.

chopperharris

sabretoothtigger wrote: »

Issuing any shares at that price low would have given us our first arab owned clearing bank

They have till end of march to raise money in order to take insurance on their toxic debt. Barclays argue they dont need the insurance and dont expect to be forced, if they are forced to issue new shares the price will at least half I'd say

I dont know about u stt but this barc sale thing smells funny.

How can a bank sell off a division , and loan the money to do so?

It needs big investigation , and if barcs dont want to commit to the credit security thing to operate in the uk .... well they simply wont , or shouldnt be allowed to do so.

StevieJ

sabretoothtigger wrote: »

They're doing well today though I cant see why, selling off good business is a negative in many ways and surely the news is as good as its going to get for now

Means no rights issue, and helps in participating in govt scheme.

sabretoothtigger

How can a bank sell off a division , and loan the money to do so?

Quite common business practice I think though obviously if it were a bad business you would not really want to do so as it increases risk

But they are selling a good business afaik under duress so taking future profits from the purchaser is a fine idea, this is their calculation I expect

A similar thing I heard recently was Prudential disposing of their Taiwan interests in order to reduce pension funding liability's but at the same time they bought shares of the company who had purchased from them so did not completely lose future profits from this growing Taiwan division they had helped found


I think it also depends on the quality of the purchaser you depend on. Hbos bought shares in companies it loaned money to and lost like 10bn that way, they doubled an allready bad risk

If the company who borrowed the money had other problems and could not pay the loan back then you take back assets you had sold, of course barclays knows ishares is a great business so the security for the loan is good (hbos was inflated land loans I expect)

Also barclays can balance the loan made against the future purchase into this insurance scheme, they are taking fair measures