Another day, another barrage of criticism for Barclays $12bn toxic assets rejig from sections of the press.
There is an amusing irony in all this — many of these same commentators have lambasted banks that have fallen into the arms of the taxpayer.
Barclays are being blasted in effect for being the first British bank to find a private sector solution for a problem that has, in the case of RBS and Lloyds, been tackled through the public sector-backed asset protection scheme.
Lloyds Banking Group’s latest attempt to wriggle out of the terms imposed on it by the government for its participation in the GAPS is a case in point.
Yes the Barclays deal is opaque, and yes the loan it has made to Protium can still be written down if the underlying assets continue to deteriorate. Barclays’ problems have not been magically solved. And yes, there is much to be said about the complexity of the deal representing, in terms of the bank’s Weltanschauung at least, what went wrong in the first place.
But Barclays has given itself the chance to draw a line under what has been the most calamitous period for banks in living memory.
Some analysts have criticised the fact that Barclays has sacrificed any potential upside from a recovery in the value of the assets. It is almost laughable that the same market that shunned Barclays for its exposure to toxic assets now craves the bank to retain its exposure to them.
As the FT’s Andrew Hill puts it:
It defies belief that what was poison six months ago, when Barclays was straining to meet the authorities’ stress tests, is now a desirable magic potion. In any case, how would anybody know, this early in a fragile recovery?
The Barclays deal is something that one would expect a media that’s seething with fury over the socialisation of losses and privatisation of gains to be praising, not damning. The fact that they are not is Barclays’ biggest failure in this episode.
Related links:
Barclays: how to lose friends and influence people – FT Alphaville
Gillian Tett: Watch Barclays in the cellar – FT