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Barclays under pressure after toxic debt sell-off

Barclays bank is today under pressure after the announcement of a $12 billion Cayman Island deal which would see the bank's toxic debt transferred to an offshore company. We covered this particular deal in detail yesterday and the enormous figures which include $12 billion in toxic debt and $400 million in management charges paid over the next 10 years. So what is wrong with the move by Barclays bank?

In the eyes of the law and the regulator there is actually nothing wrong with the move by Barclays bank to transfer assets offshore and pay a management company to manage the company's corporate debt. However, there is a feeling that Barclays bank is using "sleight of hand" to get the best deal for the company and allow the directors to reward top staff with substantial remuneration and bonus packages. At the end of the day it comes down to the fact that Barclays bank is actually a corporate entity operating in a very competitive market. These are very difficult times and the ability to cordon-off this potentially massive toxic debt burden should strengthen the company's balance sheet in the short to medium term.

While the regulators and various politicians in the UK will huff and puff in the UK press there is very little they can do about the plans of Barclays bank.

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