Qatar Holding Sells £510 Million Stake in Barclays, Shares Tumble in Early Trading

This decision marks a reduction in Qatar Holding's investment in the bank, which dates back to the crisis era.

Barclays (BARC.L) witnessed a drop in its shares during early trading on Tuesday following a significant move by one of the bank’s major shareholders, Qatar Holding, to sell approximately £510 million ($644 million) worth of its stock.

This decision marks a reduction in Qatar Holding’s investment in the bank, which dates back to the crisis era.

The sale was expected to be priced at 141 pence per share, representing a discount of approximately 1.4% compared to Barclays’ closing share price on the previous Monday, according to sources involved in the deal.

However, the exact percentage size of the stake sold has not been officially disclosed.

Both Barclays and the Qatar Investment Authority, the sovereign wealth fund that owns Qatar Holding, declined to comment on this development.

This sale comes as Barclays initiates a strategic overhaul aimed at cutting costs and boosting its share price, which has seen a 50% decrease since Qatar’s initial investment in 2008.

At its peak, Qatar Holding owned nearly 7% of Barclays’ shares in 2012.

In response to this news, Barclays’ stock experienced a decline of up to 4.5% in early trading, ultimately settling at a 2.5% decrease by 1007 GMT.

Investors are now closely analyzing the implications of Qatar’s move on Barclays CEO C. S. Venkatakrishnan and his executive team, especially with an impending strategy update expected in February.

Some institutional shareholders view the timing of this sale as peculiar, considering the upcoming strategy update.

However, it’s essential to note that investors often make decisions based on various factors beyond the underlying performance of the stock.

Qatar Holding initially became Barclays’ largest shareholder during the 2008 financial crisis by injecting £4 billion into the UK bank, which helped prevent a taxpayer bailout.

Subsequently, Barclays faced a fine of $55 million from Britain’s financial watchdog for fees paid to Qatari entities during the 2008 fundraising, a decision that Barclays has stated it intends to appeal.

Under CEO Vekatakrishnan’s leadership, Barclays has been working on cost-saving plans that could potentially save up to £1 billion, including the possibility of cutting around 2,000 jobs, primarily in its back-office operations.

Additionally, the bank has been divesting assets, such as its consumer finance unit in Germany, and is considering selling a stake in its domestic merchant services business.

Barclays has also expressed interest in acquiring Tesco’s banking business as part of its strategic expansion efforts.