Barclays Has A Problem: Bank Cannot Stop Borrowing, Lending Money

Publish date:
Updated on

Barclays announced today that it "rescued" a $1.6 billion debt fund run by Cairn Capital after it was unable to raise money in the credit markets, a situation that Barclays would undoubtedly take credit for, if only creating a discredited market were something to brag about (which, in some circles, it is, just not those in which the Barclettes move). Separately, the bank, blaming the proverbial "technical breakdown," borrowed a sizeable amount of money (£1.6bn ) from the Bank of England yesterday, for the second time in two weeks.
Barclays claims that "[the bank] itself is flush with liquidity." But does its appeal that everyone "quit your bitching and leave us alone or someone's going to get hurt" (actual statement: "In these challenging times the dramatisation of such situations is of no help to markets, their members or their customers") seem a bit defensive for an organization that doesn't have a care in the world? Some think the lady doth protest too much and are demanding answers. James Harding would care to know:

Why was it just Barclays that found itself scrambling for funds? Why could Barclays not find lenders in the commercial market? And why was it that, if the Crest settlement system was to blame, other banks did not also go running to the Bank of England?

It's getting kind of late in the day and we're about to close up shop for the weekend, otherwise we'd obviously provide groundbreaking answers (and more) to all those questions. For now, we leave you with one of our own, that might actually put this thing to bed-- substance abuse? (Don't act like it's not the logical conclusion.)
Barclays Rescues $1.6 Billion Cairn Capital Debt Fund [Bloomberg]
Barclays admits borrowing hundreds of millions at Bank's emergency rate [The Guardian]
Barclays and the interbank market [Financial Times]
Transparent lack of transparency [Times Online]