Thursday 14 December 2017

Barclays' €48bn loan was biggest under Fed facility

BarCap chief executive Bob
Diamond has been conducting a
review across the bank. Photo: Bloomberg News
BarCap chief executive Bob Diamond has been conducting a review across the bank. Photo: Bloomberg News

Caroline Salas and Matthew Leising

BARCLAYS' securities unit took out the single biggest loan under the Federal Reserve's Primary Dealer Credit Facility (PDCF), a programme created in March 2008 to provide loans as Bear Stearns collapsed.

Barclays Capital took a $47.9bn overnight loan on September 18, 2008, the day after its London-based parent said it would acquire the North American investment-banking business of bankrupt Lehman Brothers, data from the Fed shows. Mark Lane, a spokesman for Barclays, declined to comment.

Under orders from Congress, the Fed released data yesterday on 21,000 transactions from $3.3 trillion in emergency lending to stem the financial crisis. The Fed authorised its New York branch to establish the PDCF on March 16, 2008, the same day it made commitments to convince JPMorgan Chase to buy troubled dealer Bear Stearns.

The PDCF ended on February 1 of this year. The last group of companies to use the programme were Bank of America Securities, which took out a $375m loan on May 12, 2009, and Citigroup Global Markets-London, which borrowed $2bn on April 28, 2009, according to Fed data.

As the loans were made on an overnight basis, portions of the borrowings may have been rolled over on subsequent days.

Other institutions which took loans included Morgan Stanley, $47.6bn; Merrill Lynch Government Securities, $33bn; Bear Stearns, $28.5bn; Lehman Brothers, $28bn; Citigroup Global Markets, $18.6bn; Goldman Sachs, $18bn; Bank of America Securities, $11bn; Merrill Lynch Gov Securities-London, $10.5bn; UBS Securities, $6.5bn; Goldman Sachs-London, $7.2bn; and BNP Paribas Securities Corp, $4.6bn. Other borrowers were Citigroup Global Markets-London $4.05bn; JP Morgan Securities, $3bn; Mizuho Securities USA, $2.2bn; and Countrywide Securities, $1.7bn.

Meanwhile, the investment bank arm of Barclays is set to cut hundreds of jobs after several months of slow capital markets activity.

"We have begun a consultation process in the UK to reduce headcount within Barclays Capital," a spokesman for BarCap said, adding it would "continue to hire selectively across those parts of the business that are growing".

He declined to say how many jobs would be cut.

BarCap cut about 400 back office jobs in Asia, Europe and the United States in August due to the market slowdown, a source said at the time.

Rivals have also cut jobs and were expected to continue to do so as markets stay tough.

Financial market jitters in the wake of Europe's debt crisis have hurt income at trading desks, while client caution has depressed fee income from capital raisings, hurting overall investment banking income in the past six months.

BarCap chief executive Bob Diamond, set to take over as group CEO next year, has been conducting a review of returns across the bank. (© Bloomberg)

Irish Independent

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