Barclays admits Imry error

BARCLAYS has admitted for the first time making serious errors over its loans to Imry, the property company.

Last week, the bank was forced to write off pounds 240m of the loans, the largest such loss in its history. It blamed the move on the slump in property values.

But Humphrey Norrington, the Barclays vice-chairman in charge of risk management, said 'corporate misjudgement' was also to blame.

'We completely misjudged the property market,' he told the Independent on Sunday.

The bank, he said, had conducted an internal investigation into the debacle. It had found 'all kinds of things' that were wrong, which he would not specify.

'We didn't think the property market would fall as fast as it did. It was a major misjudgement.'

He said that Barclays should not have, in effect, made itself the sole lender to Imry. Barclays' total exposure to the privately owned group amounted to pounds 440m, making it the biggest-ever property loan by a single British bank.

'We should not have taken on to our books so large a proportion of the risk,' admitted Mr Norrington.

When asked whose responsibility that was, he said, pointedly: 'It was the general fault of many of us.'

According to Mr Norrington, Barclays first thought Imry might prove a problem at the end of 1989. He said that Andrew Buxton, the chief executive and chairman designate, had been 'appraised of the situation'. In July last year, despite the worries, Barclays doubled its exposure to the property company.

The problems came to a head in August this year when Castor Holdings, a Canadian finance company controlled by Wolfgang Stolzenberg, Imry's chairman, collapsed with debts of Cdollars 1.8bn ( pounds 800m).

Mr Norrington said the bank's due diligence on Mr Stolzenberg had been 'very little - although, I can assure you, we know a lot about him now'.

Mr Norrington's remarks are bound to increase the pressure on Mr Buxton, who faces mounting fury from shareholders over the bank's performance ahead of taking over the chairmanship on 1 January.

'My feeling is that Mr Buxton is too tainted to become chairman,' said one leading shareholder. 'He has lost too much credibility and has become a lame duck.'

Following earlier pressure from shareholders, Mr Buxton has already agreed not to combine the roles of chief executive and chairman, but to relinquish the former when he becomes chairman.

Shareholders are expected to press Barclays for an explanation of how the huge losses on Imry came about and, particularly, how the bank came to make a pounds 440m loan to one company.

Barclays has so far made little effort to explain itself to shareholders.

'We've had no explanation from Barclays so we will probably ask for some information next week,' a shareholder said on Friday. 'Who was responsible for what went on? It's very difficult to get to the bottom of it.'

Equally worrying for Barclays is the growing disquiet among branch and regional managers over the bank's problems and the new chairman. Many are angry at the controversy at the top of Barclays and are questioning whether Mr Buxton would have been appointed chairman if he had not been one of Barclays' 'ruling families'.

Mr Norrington admitted manager morale had been damaged by the Imry episode. One solution was to tighten lending procedures. 'We will be taking a more technical approach to judging winners and losers from now on. We want to give back to our managers, who are suffering from a lack of confidence, the mechanism to start lending again.'

An increasing number of institutional shareholders believe that Barclays is almost certain to cut its dividend at the end of the year, and they would support such a move.

'There is now a 75 per cent chance of a cut, but that's good,' said one. 'We like companies to reflect their prospects and Barclays' prospects are not good.'

Another said: 'The Imry announcement hastens the dividend cut. We're pretty certain they'll do it and it is right to do so.'

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administration Team Leader

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Recruitment Genius: Mortgage Advisor

Negotiable: Recruitment Genius: This company prides itself on its ability to p...

Ashdown Group: Solvency II Project Manager - 10 month contract - £800 p/d

£800 per day: Ashdown Group: A highly successful, global financial services co...

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Atwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'