SENIOR executives at Barclays, including chief executive Antony Jenkins, are expected to be monitoring the share price of Ziggo carefully after the bank inadvertently became a 14.2 per cent shareholder last week in the Dutch telecoms group.
Barclays picked up the stake, worth $900m (£590m), after failing to fully distribute a block of shares it underwrote on behalf of the cable group’s owners Cinven and Warburg Pincus.
Barclays is currently looking at a $31m paper loss on the shareholding, with rivals saying this could get worse if the uncertain situation in Cyprus further rattles the Eurozone equity markets.
The financial crisis in Cyprus is partly blamed by Barclays for the situation in the first place, with buyers for the block said to have been put off by the market volatility last week caused by the island’s financial problems.
The Ziggo transaction follows other block trades that have ended with shares being left with the underwriters. HSBC last November ended up holding a block of Amadeus shares worth more than €410m (£349m) after it found fewer buyers than expected.
Those supportive of Barclays’ position point out that shares in Amadeus are now above the level at which HSBC underwrote its stake and that shares in ProSieben, a media group, are now valued more highly than they were when Deutsche ended up with a stake after its block trade was not fully distributed.
Investment banks, stunted by a shortage of mergers and acquisitions work, have recently taken on a growing number of block trades in which they buy a bulk of stock from a shareholder at a discounted price with the intention of distributing the shares to others.
Lloyds Bank recently sold part of its stake in St James’ Place using this method and RBS disposed of part of its shareholding in Direct Line in the same way.
Some say Barclays has been the victim of bidding too aggressively for business. One rival banker said: “Clearly Barclays has made too aggressive an attempt to gain market share.”