Hating banking, Barclays edition November 10, 2009 at 9:25 am
The FT’s headline is Investment banking drives Barclays, and it’s accurate as far as it goes. Barclays uses retail bank deposits and credit rating to fund Lehman businesses would however be even more accurate. This is very much the model I discussed in I hate banking, just like the banks do. And it is profitable: £4.5B for the first nine months of 2009. But the financial stability consequences of this model should be troubling someone in FSA/Treasury/Bank of England, surely…
Update. Tangentially, Andrew Sorkin has an interesting post on the Barclays purchase of Lehman assets in the NYT here. It all sounds rather histrionic:
Barclays, it turns out, cut itself a remarkably good deal. A recent court filing — this one free of redactions — even accuses Barclays of making off with $5 billion without anyone noticing, an amount that Lehman’s creditors seem to think should be treated as the largest theft in banking history.
In simplest terms, the creditors to Lehman’s estate — including large pension funds and hedge funds — claim that Barclays bought the American firm for $5 billion less than it was worth.
This would be astonishing if it were true — which probably means that it is not strictly true, or at least that the story is a lot more complicated that Sorkin has it. Still, if Barclays cuts themselves a particularly advantageous deal at the expense of Lehman creditors, it would hardly be a surprise.
