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Sovereign funds lose £22bn on bank bets
Victoria Stewart and Hugo Duncan13.10.08
As Barclays today turned down taxpayer money and sought foreign investment, the extent emerged of the losses made by sovereign wealth funds betting on Western banks.
Investors from China and Singapore to Abu Dhabi and Qatar have lost $38.83 billion (£22.59 billion) buying into banks since the start of the credit crunch last summer.
The Qatar Investment Authority has already ploughed $4.52 billion into Barclays, taking a 7.99% stake that has lost $1.74 billion in value as the bank's shares tumbled. Qatar has also suffered losses investing in the London Stock Exchange.
Since the start of the banking crisis, firms in the City and on Wall Street have turned to sovereign wealth for funds to shore up battered balance sheets and cover subprime losses.
The cash-rich investors have been more than happy to oblige, gaining holdings in major institutions such as Barclays, Citigroup, Morgan Stanley and UBS.
However, with banks plunging deeper into trouble and sovereign wealth funds seeing bets turn sour, the flow of investment has slowed. Among the biggest losses is the $11.52 billion investment by Singapore and Saudi Arabia in UBS, which has dropped £7.64 billion in value since December.
