Article that talks about the realised losses by Temasek on
Barclays and Merrill Lynch.
To be honest, I think Vivian is not correct by saying that the
losses were fabrications. What he should have said was that
"the losses on some investments were more than offset by gains
on others on a portfolio basis." because if the investments were
not made, the reserves would have been higher.
By Steve
Slater and Saeed Azhar
LONDON/SINGAPORE (Reuters) - Singapore state investor Temasek
sold its stake in British bank Barclays several months ago at a big
loss, people familiar with the matter said on Wednesday.
After spending over 1 billion pounds on shares in Britain's
second-biggest bank in the last two years, unlisted Temasek
may have lost over 800 million pounds on the investment,
according to calculations by Reuters.
Temasek's loss is in sharp contrast to Abu Dhabi which sold more
than 11 percent of the bank's shares on Tuesday, making a $2.5
billion (1.5 billion pound) profit in just seven months.
Temasek sold its near 2 percent stake in December and January,
two of the sources said. The sources asked not to be named due to
the confidential nature of the investment.
"It's true that they sold in December/January," a person
familiar with the deal told Reuters.
It is further evidence that Temasek is shifting away from banks,
after it lost about $3 billion on an ill-timed investment in
Merrill Lynch.
The fund's incoming CEO Charles Goodyear may cut its large
holdings in banks to allocate money to energy and consumer sectors,
analysts at Nomura said on Tuesday.
By 2:57 p.m. Barclays shares were down 4.4 percent at 261.5
pence. The European bank sector was down 2.4 percent.
Tuesday's placing of shares worth 3.5 billion pounds at 265p
each had sated demand among investors and raised concern Abu
Dhabi's sale marked the top of the recent rally, dealers said.
Investors are also expected to get the option to buy plenty more
stock in the coming months as banks replenish capital or investors
cash in on the strong recent run.
U.S. lenders Morgan Stanley, JPMorgan Chase and American Express
have all said this week they plan to sell shares.
BANK EXIT
Temasek and Barclays declined to comment, and details of the
price it sold at were not known.
Temasek paid 975 million pounds buying Barclays shares at 720
pence apiece in July 2007. It pledged to spend up to 200 million
pounds last July to buy more shares at 282p each as part of bigger
fundraising, but it never disclosed how many it bought. It would
have spent about 90 million pounds to maintain its holding at
around 2 percent, giving it 167 million shares.
Only investors with more than 3 percent need to disclose changes
in their holdings.
Barclays shares traded between 136p and 167.8p in December and
between 47.3p and 190.6p in January, when the shares crashed to a
24-year low on fears Britain's government would need to inject
funds to boost its capital. The weighted average for the shares was
148p in December and 105p in January.
Based on the average of those prices, Temasek would have lost
about 850 million pounds on its investment.
Barclays shares have soared more than five-fold from its January
low after the regulator said its capital was adequate and business
and sentiment across the sector improved.
Temasek owns stakes in a number of financial firms, and losses
in several of them last year hit the value of its portfolio.
It invested over $5 billion in Merrill Lynch in late 2007 and
took a hit of at least $3 billion when it sold its stake in
Merrill's new parent Bank of America in the first quarter..
It still holds large stakes in banks such as DBS, Standard
Chartered and India's ICICI.
(Editing by Erica Billingham and David Cowell)
