Barclays may have ‘significant’ risks from loans to hedge funds and private equity firms, says Panmure Gordon & Co., Bloomberg reports.
In addition to holding asset-backed commercial paper, which may contain high-risk assets including subprime mortgages, the London-based bank’s securities unit may be hurt by loans to hedge funds and private equity firms, Sandy Chen, a London-based analyst at Panmure says.
“We think there is a material risk that some of Barclays Capital’s counterparties may be in trouble,” says Chen. “What was previously a strong source of growth could turn into an area of weakness.”
Shares of Barclays, down 9.8 percent this year, rose 3.2 to 658.5 pence in London, valuing the bank at 43 billion pounds ($86 billion).
“The events of the market are liquidity-driven rather than market driven,” says Barclays Global Investors spokeswoman Melissa McVeigh in an interview. “There are no fundamental changes to the market. We are maintaining the investment process that we have.”