Barclays takes £450m hit after overselling products to investors

The bank said it sold 15 billion dollars-worth of investment products more than it was allowed to under US banking rules.

28 March 2022

Barclays is set to lose £450 million after the bank admitted it sold more products to investors than it was allowed to.

Under US banking rules, the company was allowed to sell over a three-year period 20.8 billion dollars (£15.8 billion) worth of structured notes that track equities and exchange traded notes that track commodity prices and offer debt-related trades.

But Barclays admitted in the past year it sold 15 billion dollars (£11.4 billion) worth of products more than it was allowed to under regulations agreed with the US Securities and Exchange Commission (SEC).

As a result, the bank must agree to buy back the unregulated products and absorb the expected £450 million hit.

An independent inquiry has been launched by Barclays into the issue and the US authorities are also investigating how the overselling could occur.

The bank said: “Barclays has commissioned an independent review of the facts and circumstances relating to this matter including, among other things, the control environment related to such issuances.

“Separately, regulatory authorities are conducting inquiries and making requests for information.”

It was not immediately clear what checks are in place to ensure traders at Barclays did not sell more than they were entitled to or whether commissions they made over the unregulated trades would be clawed back.

Barclays did not say who would lead the independent inquiry or how long it would last.

It is understood that many of the products were linked to the price of oil and tracking the volatility index, which have both performed strongly in the past year.

Barclays also announced that as a result of the payment, it would halt a planned £1 billion share buyback temporarily, although this will start again later this year.

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