Senior Barclays trader loses £15m on Turkey bonds

Senior Barclays trader loses £15m on Turkey bonds

Donal Griffin and Alastair Marsh

A senior Barclays trader has faced losses of about £15m (€16.8m) on Turkish bonds over the past few days, according to sources.

Tolga Kirbay, a London-based credit trader, was caught on the wrong side of a wager over three trading days starting from last Thursday, said the sources.

Barclays generally makes up to €80m in revenue each year trading emerging- market corporate bonds in Europe, the Middle East, and Africa, according to the sources.

While the trade is relatively modest for the British bank overall, and while the Turkish lira has recovered some of its plunge in the past two days, it does highlight the growing appetite for risk at Barclays’ securities unit.

It’s unclear whether the positions have been hedged and if Kirbay recovered the losses.

“Barclays has an established and diversified credit business with all our trading positions hedged across the business,” the bank said in a statement.

The Turkish trading operation “represents a very small part of our overall credit business”, it said.

Kirbay, who joined Barclays earlier in the year from French lender BNP Paribas, is one of a number of hires the British bank has made for its credit business in the past year and a half as it seeks to take on more risk to chase higher returns.

He traded bonds of Turkish corporates and banks at BNP Paribas, as well as sovereign debt, according to a person familiar with the matter.

Turkish assets have taken a battering after the US sanctioned two ministers in president Recep Tayyip Erdogan’s government in a spat over the continued detention of a US pastor in Turkey, pushing the economy toward a full-blown financial meltdown.

That caused a plunge in the Turkish lira, raised the prospect of a recession and triggered falls in European banks with exposure to the emerging market, including Spain’s Banco Bilbao Vizcaya Argentaria. Some Turkish corporate bonds are down 50% this year.

Other investors have been hurt too. The BlackRock Emerging Markets Local Currency Bond Fund has fallen 6.1% in the past week, trailing 93% of its peers in that period.

The fund, which has declined 14% so far this year, has invested in local currency-denominated bonds and instruments of countries such as Mexico, Colombia, Indonesia and Turkey, the data show.

Bloomberg

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