Barclays has been reported to two of the City’s most important regulators over a bond deal from one of India’s best-known Bollywood film groups.
The bank stands accused of ‘incompetence, inertia and sheer laziness’ after a series of failures, which have left customers thousands of pounds out of pocket and prompted complaints to the Financial Conduct Authority and the Financial Ombudsman.
The stand-off centres on a £50million bond issued by one-time Bollywood darling Eros. Struggling since the pandemic, the company told investors in March last year that it would buy back up to half its bonds at 60p in the pound. Many took up the offer and handed over their bonds, but Eros changed its mind a few weeks later and bondholders were told they could have 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 its ‘Smart Investor’ platform were still unable to trade them. Eros bonds have slumped from 32p to 12p over the period, so Barclays customers have been hugely disadvantaged.
Facing the music: A scene from Eros’ release Ram-Leela – an adaptation of Romeo and Juliet
The bank also delayed paying interest 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 has behaved correctly. It is pointing the finger at Citi because, in a complex process, the American lender acts as custodian for the Eros bonds owned by Barclays customers.
Barclays said: ‘We can only release funds when we receive them from our custodian. We were advised by our custodian that the funds were not available and the bonds remained encumbered.
‘Upon receipt of the cash from Citi, Barclays paid this out to its customers. We believe we have approached all activity on behalf of our customers correctly.’
Citi refused to comment, but Barclays customers are furious, talking of ‘misinterpretation 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 a legacy for his children. His son Kevin, who has spent hours engaging with Barclays on his father’s behalf, said: ‘No one at the bank seems up to speed. They take but they don’t give.’
In recent weeks, Barclays has sent out erroneous information to customers and miscalculated the value of bondholders’ investments. In an outburst to Barclays, one bondholder pleaded: ‘Do the job correctly. Put more pressure on Citi to do its job properly and don’t put pressure on customers like me to accept shoddy service.’
Investor frustration intensified late last week when, in a last-minute U-turn, Eros reneged on a proposal to buy back some of its bonds. The company had offered to buy £2million of bonds by March 31, but admitted it was not in a position to do so hours before the market closed on Thursday.
