Assessing Criminal Damage Versus Financial Damage At Barclays

The hint from overseas politicians and regulators of potential criminal inquiries is not a good developement for Barclays.  The bank is already a shell of its former power and to prove a point its ADRs are down about 80% from the highs seen before the great recession came along.  The 11.5% drop on Thursday to $10.91 is on what is nearing 20 million shares with only about 20 minutes until the close of trading in New York.  That is more than 4-times normal volume in New York.  The London trading volume of over 220 million shares was almost 5-times normal trading volume.

What is amazing about the LIBOR manipulation is that this has not taken Barclays down to challenge 52-week lows.  The ADRs are at $10.91 and the 52-week low is $8.38.  A drop of this magnitude is far worse than what a negative headline would be. It signals that more fallout can easily be seen.  Even the news that J.P. Morgan Chase & Co. (NYSE: JPM) could now be facing a loss of $9 billion has its shares down less than 3% at $35.74.

There is not an assurance that any criminal charges will come to Barclays nor to its employees involved in LIBOR-fixing.  Still, there is no assurance at all that charges will be avoided.

JON C. OGG