Barclays blames technical glitch for £1.6bn emergency loan

Barclays blames technical glitch for £1.6bn emergency loan

UK bank Barclays says it was forced to borrow £1.6bn from the Bank of England after a technical problem with its link to the Crest settlement system left it unable to borrow in the inter-bank market to cover a short position in its accounts.

Barclays disclosed the problem after it emerged that the bank had borrowed from the central bank's emergency facility on Wednesday evening.

The bank claims a problem with the link between its electronic settlement systems and the Crest settlement house on Wednesday broke down for an hour. Barclays says it discovered it had a shortfall too late in the day to borrow from another high street bank. Barclays was also unable to source funds in the wholesale market and so had to tap the Bank of England for a loan.

The move sparked fears of a cash crisis at the bank, amid concerns about a lack of liquidity at some banks following the recent turbulence in the capital markets. But Barclays insists that it is not facing difficulties and says the situation would not have occured "had there not been a technical breakdown".

A spokesman for Euroclear, which owns Crest, told reporters that the settlement system was back to normal within an hour and no client had reported any problems. Crest also extended the deadline for settlements by an hour to clear any backlog.

Comments: (0)