Barclays’ subsidiary to clean balance sheet in tune with Spanish reform

By Julia Pastor, in Madrid | The British prime minister David Cameron may perform his isolationist act as theatrically as he likes, but facts are stubborn showing that the British banking sector very much prefers to take advantage of the European Central Bank help when available. Barclays, one of the British banking sector’s heavyweights, has confirmed that its order in the last ECB liquidity operation with a three years maturity and at 1% interest, LTRO2, reached €8.2 billion.

The British giant indicated the 75% of these funds will be used to reorganise its business in Spain. The bank, which operates in Spain since 1974, has detailed that €6.2 billion of this amount will be assigned to its Spanish subsidiary, and the remaining €2 billion, to Portugal’s.

Indeed, Barclays needs to be in tune with the financial reform in which the Spanish banking sector is involved, so that it is forced to clean up the toxic assets bound to Spain’s real estate boom still remaining in its balance sheets.

As explained by Barclays,

“the funds received from this European facility will be used to manage the risks linked to the imbalances between Barclays assets denominated in euros and the deposits in markets where the bank has significant local operarations”.

The British entity’s CEO himself, Bob Diamond, has valued as ‘very positive’ the ECB’s capital injection. Lloyds Bank, another of the big names in the UK sector, demanded €13,6 billion from ECB’s macro injection.

Cameron, Barclays, Lloyds, everybody seems to be very satisfied with the auction results and, whether they like it or not, it reveals a truth Downing Street and the House of Common must listen in London: European taxpayers are helping British financial entities to reinforce their balances. And without any sterling-scepticism nuisance.