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Barclays investor banks £2.25 billion profit

One of the mega rich investors from the Middle East who effectively bailed out Barclays bank in 2008 has sold his remaining stake in the operation via a complex hedging arrangement with Nomura bank. Sheikh Mansour bin Zayed al-Nahyan has in the process increased his cumulative profit on his original stake to £2.25 billion.

Those who watch the UK financial sector will be aware that in the depths of the recession, and the money market problems, a number of UK banks were struggling to remain liquid and effectively remain in business. While the likes of Lloyds bank and Royal Bank of Scotland eventually depended upon cash injections from the UK government, via taxpayer funding, Barclays bank decided to look to the Middle East and sold a significant number of shares to new investors. This effectively allowed Barclays bank to remain independent of the UK government by fully refinancing the operation and giving a significant buffer between required funds and available funds.

While a £2.25 billion profit on his original investment may seem extremely large, we must also appreciate that the Sheikh took a rather large gamble at a time when the UK banking sector was out of favour and in many ways out of control. Where would Barclays bank have been today without this investment?

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