Barclays Share Discussion Threads

[kenbachelor] 24/10/2010 11:00

Sorry about that Capricious. It seems that with all the edits I've done to the pdf trying to cover all eventualities, a small section had been inadvertently deleted.

I've made it clear now and thanks for drawing my attention to it.

[kenbachelor] 24/10/2010 10:46

Capricious - £353.26 + Friday's loss of £46.41 is £399.67!!!

[capricious] 24/10/2010 10:43

Morning Ken,

Your official target is 353.26, but looking on the pivot/stake picture above, it shows 399.67. I guess this is the full target if you weren't prudently holding half profits back?

[kenbachelor] 24/10/2010 10:40

Exel - First class post and I don't think you will find many on here disagreeing with you.

I'm sure the biggest problem we have is whether the judge bases his decision on the normal standards we expect of the law.

[capricious] 24/10/2010 10:37

Good post exel

[exel] 24/10/2010 10:30

great posts above, thanks all, v good summary of the 'now' options (bob), excellent links (n.b. cap), nice prob to have! (smurf).
just some stray thoughts for the mix:
1/ if LB was such a 'good deal', then, why were there NO other games in town, from either side of the pond?
2/ at what stage was it not open to them (the LB team) to marshall and place on the table their 'net assets for sale' and thereby get the 'least bad' price available to THEM as vendors, as it was clearly a distress scenario? [first rule of 'sales' is to 'know your own product', first rule of 'purchasing' remains 'caveat emptor']
3/ when doing an aquisition, even if a 'complex assets bundle', conventional wisdom suggests that there are ALWAYS surprises to come - some negative (inevitably), some positive (if one is truly fortunate). At its core, the credit crunch arose from the mis-selling of complex financial products that were better understood by those selling them, as opposed to those buying them.
4/ are we really hearing that BARC knew more about what they were buying than LB did about what they were selling?? God, we know that they (LB) could not run the proverbial whelkstall, but (if so) that would be quite breath-taking!
5/ or is this just about due legal process, the weaknesses thereof, and the failure of a judge to cover essential clearances in a timely way?
6/ once again, a 'made in America' crisis, uncovers that not only could an erstwhile major player not be relied upon to tot up and marshall their own net assets, and run through due process, but they remain the very worst of losers,,,, when they lose. Remember, BARC did not 'have to' buy what they did. LB most surely did HAVE TO sell what they sold. There was no other option, at that time!
7/ lets hope that some American necks are wound in, and that (for once) they are forced to take on board some real lessons....
8/ rewind,,, that probably won't happen, unless some cleverly constructed 'egg off face' potion is applied to settle this spat by compromise, in a way that caps the mega legal costs (on both sides) and leaves both sides able to say 'case closed'.
9/ finally, when IS a deal done?? when that much loved fat lady sings?? or when her final great-great-great-grandchild reaches pensionable age??

[jon827] 23/10/2010 22:23

Hi bob hows is going, long time no speak :-)

[bobp] 23/10/2010 22:21

noted.

i think it'll bump in the 270 to 305 range with big swings. just a feeling. can't see this taking off 'bigstyle' for another year

[smurfy2001] 23/10/2010 17:53

BobP, l should have bailed out at 390p+ but l believed this was a great long term investment and with a progressive dividend a potential money earner in the future.

Now that i've calmed down, l will decide after the Q3 Trading Statement.

[bobp] 23/10/2010 17:22

Capsi, v good, I like that lol

[bobp] 23/10/2010 17:21

Hey Smurfs, you are at 53p??

WTF are you still in for, you should have bailed out at 310p ages ago. The writing was on the wall then that there would be an inevitable pullback.

Four options..

1. Sit in and come back next year and hope its up
2. Jump out next time it hits £3
3. Bail out now
4. Bail out and jump back in at 275 ( my next stage resistance )

[capricious] 23/10/2010 17:11

I think and hope the only amount in consideration will be the 1.8b already booked, so all or some will be returned. The problem is that this judge if not the most junior, is pretty near, on the circuit. He may want to make people feel that he isn't a wet behind the ears push over.

And i guess they put Diamond in as an American face rather than a nasty British Petroleum loving Brit.

[gotnorolex] 23/10/2010 12:38

No comment from YoBamba's camp yet! It won't be long before they refer to it as BRITISH BARCLAYS? They cannot handle being outwitted, adhering to their own internal bankruptcy rules! We were the sole bidders, so they bit our hands off at the time in sheer panic! I recall the Lehman board worshipping Diamond for saving their souls and jobs. Also remember Paulson begging the Senate to back his rescue proposal to save the whole US shooting match! This is the same guy who relived the banking sector of a couple of billion shorting his competitors! Unfortunatley our mainstream banks bought a lot of their real-estate debt during the unsustainable property boom (hindsight) so the contagion was passed on to us and laid dormant till they got found out!

[capricious] 23/10/2010 09:58

I guess if it goes badly against Barclays they could choose to appeal to a judge that isn't so clearly on the Lehman side. Unfortunately you're never going to get an unbiased ruling with a US firm up against a non US firm.

[gotnorolex] 23/10/2010 09:14

Lehman Brokerage Unit Sale Details Weren't Approved
October 22, 2010, 12:03 PM EDT
More From Businessweek
By Linda Sandler and David McLaughlin
(Updates with judge remarks in ninth paragraph.)
Oct. 22 (Bloomberg) -- Final details of the distribution of billions of dollars of assets as part of Barclays Plc's purchase of Lehman Brothers Holdings Inc.'s brokerage unit were never approved, the judge in the bankruptcy case said.
"Let me be clear about one thing, Mr. Boies," U.S. Bankruptcy Judge James Peck told Barclays' lawyer David Boies yesterday. "I never approved the clarification letter," one of about 12,000 documents filed in the case.
Peck had interrupted Boies as he began closing arguments in the $11 billion trial in Manhattan. The lawyer said the judge had no legal basis for reopening his own sale order because all details of the deal were known at the time. That included a so- called clarification letter allocating extra assets to Barclays.
Lehman, which accuses Barclays of making an $11 billion "windfall" when it bought the brokerage in the 2008 financial crisis, is trying to convince Peck that he has grounds for overturning his own order approving the sale. Peck didn't indicate what effect his statement would have on the details of the brokerage sale.
Peck's remarks may indicate he sees an "opening" to revise the deal more in Lehman's favor, said Stephen Lubben, a bankruptcy law professor at Seton Hall University School of Law in Newark, New Jersey.
Pressure to Settle
"Peck is confirming that he never saw nor approved of the clarification letter," Lubben said. "Now, if he finds it material, Barclays has a problem." Barclays may feel pressure to settle the case if they interpret Peck's remarks as favoring Lehman, Lubben said.
Kimberly Macleod, a Lehman spokeswoman, and Michael O'Looney, a Barclays spokesman, declined to comment.
Boies told Peck yesterday that he can't rewrite his own sale order to force Barclays to give Lehman more money for the brokerage, as Lehman asked him to do. By law, Boies said Peck couldn't overturn the sale just because one side benefited more than the other from the deal.
"We're all navigating some unchartered territory here, and it's something that I've given a quite a lot of thought to,'' Peck said. He described his own role as judge by saying, "I'm the witness that nobody called.''
The final deal documents should have been scrutinized by Peck at the sale hearing, said Lynn LoPucki, a bankruptcy-law professor at the University of California, Los Angeles.
'Fatal Deviation'
"Under the pressure of time, the judge made a fatal deviation from the standard procedure,'' LoPucki said. "He let the lawyers supply the clarification letter later, with no process to bring it to his attention."
Before Peck ended the hearing, after more than 30 days of testimony in court, he said he would be look to lawyers of both sides for advice on how to apply the law properly in the final papers they were due to file next month summarizing their positions.
"I have a big job in front of me,'' he said. "I know you're going to help me.''
Lehman fell 0.1 cent to 7.4 cents as of 11:07 a.m. in over- the-counter trading after rising as much as 76 percent yesterday. The company's Lehman's $2.5 billion of 6.875 percent 10-year bonds due in May 2018 were unchanged at 23.25 cents on the dollar as of 11:14 a.m. in New York, according to Trace, the bond-pricing reporting system of the Financial Industry Regulatory Authority. The bond has risen from 16 cents in October 2009.
London Trading
Barclays fell 1.85 pence, or less than 1 percent, to 284.1 in London trading as of 11:14 a.m. Its American depositary receipts fell 54 cents, or 2.9 percent, to $17.88 yesterday in New York Stock Exchange composite trading. Each ADR represents four ordinary shares.
Peck may require Barclays to return to Lehman any assets that were included in the deal as part of the clarification letter because the letter wasn't approved by the court, said Chip Bowles, a bankruptcy lawyer at Greenebaum Doll & McDonald PLLC in Louisville, Kentucky. Barclays also may lose its bid to get additional assets, he said.
"Judge Peck has made it clear that the clarification order was never approved by the court and in fact never was heard by the court and that means it probably does not have any of the protection the rest of the sale order would have," Bowles said.
Peck could rule "the clarification has no effect whatsoever," Bowles said. "That what he's signaling -- that this is not sacrosanct, this is not a final order of the court."
Final Ruling
Peck may make a final ruling in January or February, lawyers in the case have said.
The battle pits bankrupt Lehman, which examiner Anton Valukas said hid billions of dollars in risks before it failed, against Barclays, the sole bidder for the brokerage.
Earlier, Robert Gaffey of Jones Day, Lehman's litigator, said the law is on Lehman's side. Grounds for Peck to revise his own sale order include mistakes or misrepresentation that may be innocent, he told the judge.
Peck is presiding over three lawsuits against Barclays, including one by the Lehman brokerage's trustee, James Giddens, and one by creditors.
Any money Peck awards Lehman would help its creditors, who stand to get 15.8 cents on the dollar on average, and hurt shareholders of Barclays, which reported net income of 2.4 billion pounds ($3.8 billion) in the first half.
Peck, a 65-year-old native New Yorker, was the Manhattan court's second most-junior bankruptcy judge in September 2008 when he was randomly assigned the $639 billion Lehman bankruptcy, the biggest in U.S. history.
SEC Encouragement
His Sept. 19, 2008, order approving the brokerage sale was signed four days after the 158-year-old bank collapsed. The order was encouraged by the U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York, which were seeking to calm global securities markets spooked by the bankruptcy, according to court testimony.
Peck's order allowed Lehman's and Barclays' lawyers to change any documents he had approved, or add documents that weren't finished yet, though he said the changes shouldn't "have a material adverse effect on the debtors' estates" and should be approved by Lehman, its creditors and Barclays.
In the trial, which has been going on since April, Lehman accuses Barclays of taking a $5 billion "secret" profit on a portfolio of securities it acquired with the brokerage, and of making another $6 billion by writing up business assets, skimping on promised payments and "grabbing" more financial assets belonging to Lehman.
Disputed Assets
Some of the disputed assets were assigned to Barclays in the clarification letter filed in court on Sept. 22, 2008, two days after Peck approved the sale.
Barclays says it wants $3 billion of assets that were never delivered. Lehman has no legal right to challenge the transaction now because its advisers knew and documented all the details when the deal was struck, and defended it in a higher court when it was challenged, according to Barclays.
Peck will be reluctant to overturn his entire sale order for "bankruptcy policy reasons," said Bowles. So-called 363 sales, which helped the former General Motors Corp. and Chrysler LLC to reorganize in bankruptcy and created jobs for 10,000 Lehman employees at Barclays, normally are considered final in the courts, he said.
Under Peck, the two-year case has cost Lehman creditors $1 billion in fees to managers and advisers, the most expensive bankruptcy ever. Briefs summarizing each side's evidence are due in late November.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

[kenbachelor] 23/10/2010 07:55

Robert - I keep saying that I won't answer questions on here and that answers will be given to sensible questions posted here on my other thread, but I think this is wide enough for general release.

One of the guys at work is going to give money (I don't know how much) to a friend (not his wife) who has undertaken to contribute an equal amount and place their bets. They will then share the profits/losses.

All joking aside, that sounds to me like a recipe for disaster.

[robertfaulkner] 23/10/2010 07:41

I think the loss of only £46 on Friday seems to show the Somnus system can handle bad(unlucky)days.

My worry is I'll watch the system until I have the courage to try it and then it will hit a period of losses (As all investment/bets do) and although overall the system will still be making great profits I'll bottle out before the system returns to a profit run.

So guys send me money to not put the mockers on it

[wenlynn] 23/10/2010 07:27

Ken named his system "Somnus" because he was half a sleep when he thought it up.
IMHO

[kenbachelor] 23/10/2010 06:56

Juggler - I posted the answer to that when I first thought of the name!

[smurfy2001] 22/10/2010 21:44

And, just before we leave Bank of Bob, it's worth noting that Merrill has stepped back its forecasts for BarCap again.



We are taking a more cautious stance on BarCap revenues for this year, but more
importantly for 2011 and 2012. We cut our EPS forecasts by 12%, 18% and 12%
respectively to 27.5p, 35.0p and 50.6p. Our PO falls to 370p from 420p.

2009 was a vintage year for IB's. Strong issuance, wide credit spreads and
volatility made for cyclically high revenues in FICC. 2010 has been a different
story and whilst issuance has picked up somewhat, narrow spreads and falling
volatility make credit trading more challenging. QE2 makes the rates business
more difficult as the curve flattens and volatility falls. This all potentially points to a
continuation of the tough trading environment in 2011.

Now factor in £13.3bn of BarCap revenues for 2011
We have stepped away from Barclays base revenue guidance of £3.8bn per/q.
We now forecast FY10 revenues of £13.1bn (was £13.6bn), rising only modestly
to £13.3bn in 2011 (was £15.6bn). FICC revenues remain the biggest contributor
at £8.2bn and we now forecast them to be down 15% in 2011 versus the 1H10
annualised run-rate (more in line with our DBK estimates). We model a return to a
more "normal" £3.8bn quarterly run rate in 2012 when we pencil in £15.1bn of
revenues – we flex costs and factor in a 65% cost net-income ratio.

[smurfy2001] 22/10/2010 21:39

Well having read the FT today (alphaville) it looks like BARC will lose the Lehmens case. Now how they give back the $11bn is of question.


Barclays (rated HOLD, target price 290p) is today being reported (see Bloomberg article below) as being more likely to lose its lawsuit against Lehman, whereby the latter is suing Barclays for making an $11bn windfall profit from purchasing assets from Lehman when it went bankrupt. Lehman asserts that the judge which originally signed off on the sale has a right to overturn his own decision. The worrying turn of events for Barclays is that the same judge seems to be siding with Lehman.

CONCLUSION: The worst case impact is that Barclays needs to write off the total value of the $10-11bn of assets that it has already booked, minus the minor $0.5bn that it has has not yet booked as a receivable. If we assume Barclays is impacted by a round $10bn (i.e. ?6.4bn), then this would represent 88% of FY2011E pre-tax profit and 12% of 2011E shareholders' equity, so rather substantial. We expect at this time that perhaps Barclays could be forced to make a write off of $3-5bn (i.e. returning some assets to Lehman, and being forced to reverse the write-ups on some assets that it previously bought), which would impact 2011E shareholders' equity by 4-6%. This is not anticipated by the market so today's news would be an incremental negative.