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October 21, 2009

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Qatar Holding offloads Barclays shares

BARCLAYS shares dropped 5 percent yesterday after the British bank's largest shareholder, Qatar's sovereign wealth fund, said it was selling a stake worth more than US$2 billion.

Qatar Holding is selling 379.2 million shares, but will retain its overall stake in Barclays by exercising an equal number of existing warrants, or rights to new shares.

The deal makes Qatar Holding, the main investment vehicle for the gas-rich state's sovereign wealth fund, the second major Gulf investor to cash in on its piece of the bank this year.

The fund stressed it remains committed to the bank.

"The decision to exercise the warrants and dispose of the resultant shares forms part of Qatar Holding's portfolio management program and does not impact on our current intention to remain a long-term strategic shareholder in Barclays," CEO and Managing Director Ahmad al-Sayed said.

Barclays turned to investors from Abu Dhabi and Qatar last November for a total injection of up to 7.3 billion pounds (US$12 million) to shore up its balance sheet, rather than take on the British government as a major shareholder, as the Royal Bank of Scotland and Lloyds Banking Group did when struggling with the global economic crisis.

Abu Dhabi's International Petroleum Investment Company made a US$2.5 billion profit in June by selling part of the Barclays stake it picked up just seven months earlier, prompting questions about Gulf investors' loyalty to the bank.

Qatar Holding said at the time it remained committed to Barclays and saw it "as a valued commercial and strategic partner."

The fund said the deal announced yesterday should give Barclays proceeds of about 750 million pounds.

Barclays CEO John Varley said in a statement that he was happy to help Qatar place half of its warrants in the bank, calling the fund a "key partner."


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