Nationalization premium to work at BarCap?

9 March 2009

2 minute read

Nationalization premium to work at BarCap?

Barclays Capital may be one of the only investment banks hiring, but its appeal is waning. Prospective employees said to be demanding guarantees and pay premiums to compensate for the danger of nationalisation.

Shares in Barclays Plc are down more than 10% this morning and down more than 84% in 12 months. Last Thursday alone they plummeted 25% following a Panmure Gordon report suggesting Barclays could be in line for impairment charges of 13bn this year if monolines default and it's forced to writedown its CLOs .

Barclays is consulting with the Treasury on participation in the UK government's Asset Protection Scheme. If the scheme is deemed in 'shareholders' interests', it allegedly intends to ask the government to insure a modest 60bn of its 2 trillion of its balance sheet against further writedowns.

It's not unthinkable that Barclays - and the bankers at BarCap could yet follow Lloyds and RBS into the arms of the British government.

"With Lloyds today, the government appears to have changed the rules about what is an adequate level of capital," says Simon Maughan, head of European banks analysis at MF Global. "The implication is that Barclays doesn't have sufficient capital and the only source of additional capital is likely to be the government."

None of this plays well to BarCap's ambition to hire people for its European equities and advisory businesses.

But headhunters working for the bank say most prospective hires have other things on their minds.

"There's a lot of people who want to talk to them," says one. "Every bank has a significant chance of being nationalized now. There are no risk free options out there."

AUTHORSarah Butcher

Global Editor

Bo
Bob
10 March 2009
Pablo seems to have a personal problem with Barclays. Put your head in the sand and you won't hear the explosion.
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Pa
Pablo
10 March 2009
Sorry to labour a point but I think it's important. Where pray tell did Barclays manage to acquire nearly 1 trillion (p12 consol balance sheet) of new non-toxic totally sound assets during the year of our lord 2008? If we make a not far fetched conservative assumption that maybe these are valued strangely given they've only just appeared, say 75% Barclays then has a 246 billion hole in its balance sheet (equivalent to 2/3 of customers deposits). You can make much scarier scenarios yourself.
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Pa
Pablo
10 March 2009
50% of their balance sheet is derivatives.
Their balance sheet has also doubled since laster year.
You don't have to be Sherlock Holmes.
How are these derivatives valued? Who are the counterparties? Who underwrites them?
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Pa
Pablo
10 March 2009
We'll find out who's right much sooner...
"Barclays was warned on Monday that its balance sheet would be subject to forensic Treasury examination if it decided to dump toxic assets on the taxpayer, amid signs that the bank could face a higher-than-expected bill for using the government's asset insurance scheme."
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Da
Daniel
9 March 2009
You are really tiring and soaked in pessimism.
Yet there is something worse than nationalisation by Q4 2009, i.e. that you get a fatal disease by Q3 2009.
Get a life, guys! Barclays is alive and kicking.
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