Barclays - Weekly - The bank is down 18% YTD and 30% from it's yearly highs. This could provide a buying opportunity.

Overview

Barclays PLC (LON: 'BARC') is a British investment bank and financial services company. The shares are down about 18% YTD making it the worst performing bank on the LSE. The loss has stemmed from an issue in its derivatives department. Barclays can offer certain investment products to clients worth up to $20bn set by their licence, however it's recently be discovered they've gone over this limit around $15bn meaning they'll need to buy back the issued securities from investors at their original price. This is known as a recession offer. Its expected to cost at LEAST £450m. The extent of the damage is still not fully known as it is being investigated by regulators in the UK and USA. A large investor has also been rumoured at have sold £900m worth of Barclays stock as well, also hurting the price even more (Equivalent to a 3.3% stake).

Financials

Total market cap for Barclays sits at £26bn. Before the share offloading and derivative issue the total market was around £30bn. A full financial report can be found here.

Technicals

From a technical aspect Barclays is under pressure but support sits below. Major support is £1.40. A break below here could see the bank slip to £1.19. Towards the upside initial resistances/targets are £1.81 followed by £2.17. The RSI reads 36 on the weekly and 34 on the daily so another flush lower is possible without oversold conditions.

Summary

Banks in the past have done much worse things and therefore I do believe the damage will be limited. The bank is down over 30% from the yearly highs which is a lot for a profitable, stable bank. It won't go bust as its too integrated within the UK financial system and with mortgage rates & loan rates rising this is going to help the banks core lending become more profitable. The derivatives and investments aspect of the business will likely continue to be okay as well as its very integrated part of the UK financial system.