Abu Dhabi’s rescue investment in Barclays was being called the punt of the decade yesterday as the Gulf state appeared to be on track to make a profit of at least £2 billion on the deal after only eight months.

On top of a £1.45 billion profit made on its exit from convertible notes in the bank yesterday, Abu Dhabi is close to clinching a gain on £1.5 billion of high-yielding reserve capital instruments in Barclays, which it also plans to sell. The bonds, which pay an interest rate of 14 per cent for ten years, are likely to fetch a high price, given the slide in global interest rates and the improved creditworthiness of Barclays since they were created.

While Abu Dhabi has no immediate plans to sell £1.5 billion of warrants in Barclays, which it was also awarded at the time of the rescue, these, too, are registering a notional profit — of about £570 million.

Unlike Qatar, which had lost money on a previous capital injection in Barclays, Abu Dhabi and Sheikh Mansour bin Zayed al-Nahyan were new to the bank when they were asked for rescue capital during last October’s banking crisis.

All told, the Gulf investors put in £6 billion, triggering a disagreement between Barclays and its traditional shareholders, who felt disadvantaged.

A large share auction orchestrated by Credit Suisse began at 10pm on Monday in the United States and continued in Europe early yesterday as Abu Dhabi ordered the sale of shares it is due to receive as a result of converting the notes. Institutional investors placed provisional orders for $9 billion (£5.4 billion) of Barclays shares, covering the placing 1½ times. The price was struck at 265p, a 16 per cent discount to the closing price on Monday. The shares closed yesterday 13.5 per cent lower at 273½p.

Institutions, while happy to buy the shares, complained about the way in which Barclays had originally billed the Abu Dhabi connection as a long-term strategic link that would bring the bank new business. One said: “There is some embarrassment within Barclays about this. They sold it as a deal about much more than the money. It was about acquiring a strategic investor who would open doors in the Gulf. That relationship can’t be as close now.”

Other investors were more positive, praising the bank for dodging the need for government capital. One said: “They played a blinder. They wanted to keep the Government off their books and took it right to the wire in terms of their capital strength. Now they seem to be emerging with credibility and balance sheet intact.”

International Petroleum Investment, the Abu Dhabi business holding the Barclays investments, said that it wanted to concentrate more on opportunities in hydrocarbon investments.

The exit means that Abu Dhabi will own about 5 to 6 per cent of Barclays if it exercises the warrants and retains the shares. Before the deal it stood to own as much as 16 per cent of the bank.

Double whammy

Banks and building societies that face a big rise in fees to bankroll the depositor lifeboat scheme suffered another blow yesterday — the doubling of fees to fund their regulator. The Financial Services Authority (FSA) is raising the fees by 109 per cent to £124 million. It said that the increases were designed to reflect its higher workload. The Building Societies Association attacked the fee rises, which come days after revelations that in May FSA officials received bonuses 40 per cent higher at £19.7 million.

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