BZW dismisses reports of error

BZW, the investment banking arm of Barclays Bank, moved swiftly to play down news of a pounds 11.5m loss on a 1996 currency trade which emerged in press reports yesterday.

The bank dismissed suggestions there had been a mispricing error, saying that it was merely an ordinary deal which went wrong. Sources within BZW insist that the people involved in the July dollar-market deal were within their dealing limits, and that when managers discovered that "a rapid movement in the currency markets" was moving against the position they acted "within minutes".

While the emergence of such a loss has clear resonances with the pounds 77m charge NatWest Markets was recently forced to make against a mispricing error on options trades, the markets took a relaxed view of the affair.

Bank stocks were being marked sharply up yesterday following a "buy" note from James Capel, and Barclays shares rose 26p to 1016.5p. BZW confirmed that the position involved in the loss was being managed by Paul Ellis and Paul Doust, both of whom subsequently left the bank last year. BZW says their departures were by mutual consent. The bank refused to comment on whether their leaving was linked to the loss, saying: "We never comment on that - it's an unreasonable thing to do."

Such is the sensitivity of investment banks, particularly British ones, following the NatWest Markets mispricing scandal, that BZW felt obliged to issue an official statement yesterday. It said: "In July of last year, senior management in BZW's markets division and its independent risk management function took action to hedge a trading position which had been adversely affected by an unanticipated and rapid movement in the currency markets.

The statement said the loss was not a material one as far as the annual results were concerned.