Barclays has been reported to two of the city’s top regulators over a bond deal with one of India’s best-known Bollywood film groups.
The bank has been accused of ‘incompetence, slowness and sheer laziness’ after a series of failures that have left customers losing thousands of pounds out of pocket and complaints have been lodged with the Financial Conduct Authority and the Financial Ombudsman.
The standoff centers on a £50m bond issued by former Bollywood darling Eros. The company has struggled since the pandemic and told investors in March last year that it would buy back half of its bonds at 60p in the pound. Many took up the offer and handed over their bonds, but Eros changed their mind a few weeks later and the bondholders were told they could get their bonds back.
Platforms such as Hargreaves Lansdown and AJ Bell returned bonds to investors within days, but Barclays only returned bonds earlier this month – nine months late. And customers on the ‘Smart Investor’ platform were still unable to trade them. Eros bonds have fallen from 32p to 12p over the period, putting Barclays customers at a huge disadvantage.
Confronted with the music: a scene from Eros’ release Ram-Leela – an adaptation of Romeo and Juliet
The bank has also deferred interest payments on the bonds. Most investors received their money in May last year. Barclays customers were paid at the end of July.
But the bank says it acted correctly. It points the finger at Citi because the American lender acts as custodian for the Eros bonds owned by Barclays customers in a complex process.
Barclays said: “We can only release funds if we receive them from our custodian. Our custodian informed us that the funds were unavailable and the bonds remained encumbered.
‘After receiving the money from Citi, Barclays paid it out to its customers. We believe we have properly addressed all activities on behalf of our clients.”
Citi declined to comment, but Barclays customers are furious, citing ‘misreading of the situation, incompetence, inertia or sheer laziness on the part of Barclays and/or their custodian Citi’.
Peter Buck, 87, invested in the bonds as an inheritance for his children. His son Kevin, who spent hours working with Barclays on his father’s behalf, said: ‘No one at the bank seems aware. They take, but they don’t give.’
In recent weeks, Barclays has sent incorrect information to customers and incorrectly calculated the value of bondholders’ investments. In an outburst against Barclays, one bondholder pleaded: ‘Do the job correctly. Put more pressure on Citi to do a good job and don’t put pressure on customers like me to accept poor service.”
Investor frustration increased late last week when Eros reneged on a proposal to buy back some of its bonds in a last-minute reversal. The company had offered to buy £2m worth of bonds by March 31, but admitted it was unable to do so hours before the market closed on Thursday.
