Qatari's quick buck on Barclays, Diamond stays put

Qatari Holdings raises £1.4bn from its Barclays stake as Bob Diamond swears allegiance to the bank.

Last Updated: 31 Aug 2010

Only a year after buying a substantial stake in the British bank Barclays, Qatar's sovereign wealth fund is selling 379.2m shares after exercising warrants at a price of 197.78p, raising an estimated £1.3bn. Taking into account the price it bought the warrants at, that equates to a £600m profit for Qatari Holdings  - not a bad year's work by any measure.

The deal also provides Barclays with a tasty £750m windfall to boot - everybody's happy. Including even legendary BarCap boss Bob Diamond, who has apparently turned down the possibility of the top job at Bank of America to stay with Barclays. At any rate he was shortlisted for the post, made vacant by the imminent retirement of Ken Lewis, but declined an invitation to interview.

Of course, large investors liquidating their holdings in a firm can be seen as a vote of no confidence, but there's no suggestion of that here. For one thing the deal only reduces QH's stake from 7.4% to 7.1%, and for another QH's chief exec, Ahmad Al-Sayed, has been at pains to stress that the fund is still very much a long-term investor in Barclays.

So what does QH need the dosh for? The speculation is that it wants a cash advance to going shopping at - or rather, for - Sainsbury's. After last week's rumours of a Qatari bid for the supermarket chain, it's not hard to see the logic, and the market reflected that view: Sainsbury's shares climbed by almost 4%.

Barclays sold a total £7.3bn worth of shares to the oil-rich sovereign families of Abu Dhabi and Qatar in October last year, in order to avoid going cap-in-hand to the British Government for a bail-out like so many of its rivals. It was a controversial move at the time, but does at least mean that the bank now enjoys the luxury of not having the Treasury poring closely over all its management decisions.

Diamond's decision to stay put certainly seems to vindicate Barclays' approach - Bank of America has been bailed out by the US government to the tune of $20bn (with a further $118bn of loan guarantees). It seems likely that Diamond - who famously trousered total pay of some $20m in 2007 - didn't fancy working for a bank which is in hock to the authorities to such an extent.

Although the fact that he is also expected to enjoy another eye-watering payday this year for Barclay's lucrative acquisition of Lehman's North American business may also have something to do with it. Barclays may be glad of some of the £750m it has earned from the QH deal today when bonus time comes around... 

In today's bulletin:

Qatari's quick buck on Barclays, Diamond stays put
Apple ripe despite downturn
Greggs plans expansion on back of sales growth
Employers still discriminate on racial grounds, says DWP
Promotion from within best way to increase confidence in bosses?

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