Barclays: Protium deal worries shareholders

A look at the longer-term performance of the shares of some of the leading 'universal' banks confirms that shareholders have largely been left out of the party when it comes to sharing the wealth generated by the explosive growth of financial markets during the past two decades. So it should not be a surprise that more than one eyebrow is raised about the cosy deal that was struck between Barclays Bank and a number of its employees when $12.3 billion of toxic assets were sold to the Protium off-balance sheet vehicle in September 2009. It is not obvious why this transaction was necessary as the amount is quite insignificant compared to the Bank's total balance sheet. As is often the case when banks dispose of unwanted assets one has to ask why outside parties should get the upside. Surely the price of any such deal reflects what should be a realistic market price. Why would a bank - once it has accepted market reality - not stick to an asset that has been marked down to a new - and more attractive - price level? The only explanation we can come up with is bureaucratic inertia or intellectual lazyness thus opening an opportunity for outsiders with an eye for value