US regulator prepared to end Barclays’ Protium deal

US regulator prepared to end Barclays' Protium deal

The US regulator found Barclays' Protium deal "inappropriate", after the bank admitted a more pressing motivation behind its strategy

BARCLAYS’ CONTROVERSIAL Protium deal has come under fire from the US Securities and Exchange Commission, which said it was prepared to prohibit the package and could not agree that it was “appropriate”.

The deal saw the bank loan $12.6bn (£7.67bn) to a group of its own investment bankers who used the cash to set up Cayman Islands company Protium, which promptly bought $12.3bn of bad assets from Barclays.

It was billed as a way to mitigate the impact of volatile market values and “deliver more stable risk-adjusted returns”, The Daily Telegraph reports. However, upon closer questioning, the SEC was informed that its primary purpose was to occupy the team who had been managing the bank’s toxic assets in a bid to prevent a mass walk-out.

The bankers were at risk of leaving due to the bank’s move away from investment in sub-prime assets, effectively ending their long-term career prospects. Barclays finance director Chris Lucas told the SEC that the original goal of stabilising risk-adjusted returns was in fact just an “additional objective”.

Critics said the deal is proof that Barclays was held to ransom by its bankers and used creative accounting to turn toxic assets into a seemingly stable loan, thereby avoiding consolidating sub-prime financial packages on its balance sheet.

Barcalys declined to comment on the Protium deal.

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

4m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

5m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

6m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

6m

Related Articles

SEC: Reverse mergers risk dodgy accounting

Accounting Firms SEC: Reverse mergers risk dodgy accounting

8y Rose Orlik
US companies could adopt IFRS by 2015: SEC

Accounting Standards US companies could adopt IFRS by 2015: SEC

10y Mario Christodoulou, Writer
Schapiro backs international standards

Accounting Standards Schapiro backs international standards

10y Mario Christodoulou, Writer
Madoff could have been caught 17 years ago

Audit Madoff could have been caught 17 years ago

10y Mario Christodoulou, Writer
Stanford's financial officer pleads guilty

Corporate Finance Stanford's financial officer pleads guilty

10y Mario Christodoulou, Writer
GE settles $50m fraud charges

Corporate Finance GE settles $50m fraud charges

10y Mario Christodoulou, Writer
Overview: Obama's new broom

Corporate Finance Overview: Obama's new broom

11y Gavin Hinks, Writer
Cox warns US not to drop accounting rules

Accounting Standards Cox warns US not to drop accounting rules

11y David Jetuah, Reporter