Barclays will conduct a rescission offer to eligible investors who purchased the affected securities and repurchase the securities at their original purchase price

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Barclays Bank branch in Sutton, southern Greater London. (Credit: A P Monblat/Wikipedia)

Barclays Bank, the UK subsidiary of Barclays, is set to face £450m in losses, as the bank has sold securities to investors more than the registered amount.

The bank is a regular issuer of structured notes and exchange traded notes in the US and was allowed to sell structured notes worth $20.8bn in three years, as per the US rules.

Barclays admitted that it has sold products worth more than £11.4bn only in the past year, which exceeds the limit agreed with the US Securities and Exchange Commission (SEC).

The bank intends to conduct a rescission offer to certain eligible investors who purchased the affected securities and repurchase the securities at their original purchase price.

Subject to current market prices, and potentially eligible purchasers choosing to participate in the rescission offer, Barclays estimates the rescission losses to be around £450m.

Also, it expects the CET1 ratio of BPLC and its subsidiaries to be around a target raging of 13 to 14%, as of 31 March 2022.

Barclays Bank, in a statement, said: “This reflects a c.14 bps reduction from the estimated loss and a further c.15 bps reduction due to an increase in risk-weighted assets in respect of short-term hedging arrangements designed to manage the risks to Barclays arising out of the rescission offer.

“The equivalent impact on BBPLC’s solo-consolidated CET1 ratio as at 31 March 2022 is expected to be a reduction of c.23 bps in respect of the estimated loss and c.23 bps in respect the hedging impact. The hedging impacts will reverse on the conclusion of the rescission offer.

“The above represents Barclays’ best estimate at this time of losses which may arise from these matters and will be reflected in BPLC’s Q122 Results Announcement. Barclays is also assessing the impact of these matters on prior period financial statements of BBPLC.”

Barclays said that its previously planned £1bn share buyback programme, announced last month, is expected to start in Q2 22, following the publication of Q1 22 results.

The company said that it has launched an independent review of the facts to assess the matter, including the control environment related to such issuances.

Also, regulatory authorities are separately conducting inquiries and requesting information.

Barclays said that it will continue its structured products business in the US, and is planning to file a new automatic shelf registration statement with the SEC soon.