Barclays shares resume drop amid fraud allegations

Barclays shares resume drop amid fraud allegations

Barclays shares continued to trade lower on Wednesday amid allegations by the U.K.’s Serious Fraud Office (SFO) to the lender and four former executives.

As of 09:11 GMT, Barclays shares were 0.81 percent down to 201.15 pounds in London Stock Exchange, paring some of the earlier losses when it tumbled more than 1 percent.

Barclays shares lost 1.69 percent the previous session as it close at 202.80 pounds, while it opened today on a downside gap at 201.80 pounds.

FTSE 100 index shed 0.35 percent to 7,446.56 points.

Over the past few years, Barclays’ reputation has been hit hard, while it is currently facing a major setback that could worsen the bank’s financial situation and push its shares even lower.

The SFO has accused four former executives, including Former CEO John Varley, with criminal charges related to bank’s bailout from Qatar during the 2008 financial crisis.

Over five years of investigations, the SFO had discovered the enormity of bank’s handling with Qatar, questioning nearly 45 people, some of them were questioned more than once.  

While Royal Bank of Scotland and Lloyds resorted to the British government to get financial assistance, Barclays opted to take a huge fund from Qatar.

Qatar along with other investors provided Barclays with a fund worth 4.5 billion pounds in June 2008, while it received a second tranche worth 7.3 billion pounds in October.

Barclays is currently accused with two separate charges. The first is related to a 322 million pound that were paid to Qatari advisers, where there was no clear information about reasons for paying such a bulk. That was described as a conspiracy to commit fraud by false representation.

The Financial Conduct Authority (FCA) said the fees were designed “not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the capital raisings.”

The second charge is even more serious as it involved giving a 3-billion-pound loan to Qatar in November that were paid back to buy the bank’s own shares to enhance its financial position. The FCA deemed the action as unlawful financial assistance.

Financial Situation

In the first quarter of 2017, Barclays doubled its profit as it recorded 1.7 billion pounds, up from 793 million pounds a year ago.

The following table shows Barclays’ net income and cash flow activities during the last three years, according to Yahoo Finance.

Barclays Technical Analysis - New York Stock Exchange

Barclays share traded in New York Stock Exchange is currently forming a bearish wedge pattern within the main bearish trend, as depicted on the monthly chart, while the stock price currently stands at $10.18 levels.

By taking a look at the daily chart, we can notice that the stock has confirmed its breach of the minor ascending trend line. The stock also managed to breakdown the support line, which confirms the bearishness of the stock, amid negative pressure from the RSI after being able to break down the bottom line of the triangle pattern.

Regarding the expected target for the share, we note that with Barclays managing to breakdown to 10 levels, the next targets are 9.40 and then 8.80.

Barclays Technical Analysis – London Stock Exchange

In the London Stock Exchange, Barclays stock is trading in a classic technical pattern in the form of a bearish triangle. The stock has seen an upside rebound after testing the support levels at 123.69.

However, as the stock approached the upper line areas of the triangle pattern, it was unable to continue its bullish and fell to the downside after forming a number of reversal candles, where the price is currently stable at 200.05 levels.

If we look at the daily chart, we will see the continuation of the bearishness on Barclays share, after the stock breached to the downside the bottom line of the side-way channel, and the stock then penetrated down the levels of the rising minor trend, which the stock re-tested and then returned back to falling.