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Time to bail out from Barclays

February 25, 2013

For quite a long period of time, the only business of Barclays that earned an appropriate return on capital was its “tax structuring” (tax avoidance to you and me) business.  It was the only place where Barclays added value to its clients, even if the business had dubious ethical and legal overtones.  To create a refurbished Barclays, the new CEO is getting rid of this business.  That is a signal for creditors to this institution (particularly the sub-debt holders) to bail out from this bank.  This bank will now produce a serious of sub-par returns, which at some point might cause the UK bank regulator to order the bank not to service its Tier II debt (banking regulators have the power to prevent the servicing of Tier II debt if they feel that the bank needs to conserve resources).

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From → Credit Analysis

One Comment
  1. Rajgopal permalink

    And as an indicator of macro stress U.K has been Stripped of AAA Rating by Moody’s Amid Outlook Weakness

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