Shares of Barclays PLC (BCS, Financial), a British multinational investment bank, were up 0.67% in London trading on Monday. The stock’s price is expected to rise further on Tuesday following the announcement that the bank will not be liable to buyers of the company’s U.S. IPO before the 2008 financial crisis.
The bank had been accused of misleading investors on its capital shortfall and risky debt exposure.
The court ruled 3-0 in favor of the bank, dismissing all claims against it. Barclays had sold over $2.5 billion in depositary shares in April 2008 before the financial crisis. The crisis sent shares down 80% by the following March.
Barclays stock has plummeted in 2018, falling from 203 British pounds to 166 British pounds between Jan. 2 and Nov. 19. The over 19% drop in the stock’s value has led to rumors surfacing last week that the bank may be in danger of losing its place on the Stoxx Europe 50 index.
Brexit fears have led to several lenders in the UK losing value this year, and investors are pushing the bank to offer fewer loan options and to reduce their trading business. Expulsion from the Stoxx Europe 50 would force ETFs tracking the Stoxx Europe 50 to sell off Barclays’ stock and start readjusting their portfolio with the company that replaced Barclays.
Linde, a German industrial gas company, is likely to be the company to replace Barclays in the index. The company would need to lose over 20 billion euros in value to not replace Barclays in the index if the stock does not recover by the end of the month.
Changes to the Index’s gauge are expected on Dec. 3 after the closing bell, but Stoxx has been silent on any potential changes that are in the works.
The Stoxx Europe 50 has faced headwinds associated with Brexit throughout 2018, with a 0.6% drop in overall value last Thursday following the announcement of U.K. resignations relating to Brexit. The resignations are a signal that the U.K.'s government has failed to gain support from lawmakers in the negotiations with the EU.
Barclays earnings were released at the end of October, beating expectations. The company’s net income was 1 billion British pounds for the period ending Sept. 30. Macroeconomic uncertainty remains for the bank, along with Brexit concerns, which will put pressure on it for the remainder of the year.
Disclosure: The author does not have any stakes in the listed equities.
