Protium: Picking a solution out of thin air

first_imgWednesday 27 April 2011 8:39 pm Protium: Picking a solution out of thin air Show Comments ▼ More From Our Partners Astounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgSupermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse estatenypost.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comBill Gates reportedly hoped Jeffrey Epstein would help him win a Nobelnypost.comKamala Harris keeps list of reporters who don’t ‘understand’ her: reportnypost.comSidney Crosby, Alex Ovechkin are graying and frayingnypost.comI blew off Adam Sandler 22 years ago — and it’s my biggest regretnypost.comKiller drone ‘hunted down a human target’ without being told tonypost.com980-foot skyscraper sways in China, prompting panic and evacuationsnypost.comBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.comPuffer fish snaps a selfie with lucky divernypost.comUK teen died on school trip after teachers allegedly refused her pleasnypost.com whatsapp THE toxic assets that make up Barclays’ so-called Protium portfolio are aptly-named. Protium is the most common isotope of hydrogen gas, and the bank was plucking a solution out of thin air when it used a barely-disguised accounting trick to push $9.8bn of toxic assets off its balance sheet. Little wonder the manoeuvre has failed: now the bank is paying an £83m “management fee” to get the assets back from C12, the asset manager set up by a bunch of Barclays traders to manage the loans. The bank plans to sell the assets over the next three years, likely at a discount to what they will eventually be worth, so it doesn’t have to hold capital against them. Shareholders have had enough of the hocus-pocus typified by the Protium deal – it reeks of the kind of exotic finance that was one of the reasons for the credit crunch (remember the CDO squared anyone?). But the solution to the Protium mess is hardly an exercise in simplicity. Although the assets will return to the Barclays balance sheet, they will continue to be managed by C12. Coincidentally, or so we’re told, Barclays is making a $750m investment in Helix, a separate fund managed by C12. Make sense? We didn’t think so. In truth, the long-term effect on Barclays’ performance will be negligible; save for the £83m “management fee”, there will be little material impact. The cost to its reputation, however, will be much greater. This debacle comes at a tough time for the bank, with first-quarter pre-tax profit down nine per cent year-on-year to £1.66bn and underlying pre-tax profit at BarCap, the investment bank, slipping 15 per cent. Management needs to focus on boosting performance – and leave creative accounting tricks in the past. whatsapp KCS-content Share Tags: NULLlast_img


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