Banking: Barclays tumbles 5% on news of Qatar share sale

Shares in Barclays dropped more than 5% yesterday on the prospect of a big share sale after news that Qatar's sovereign wealth fund was cashing in its warrants in the bank.

The move does not affect Qatar's status as the bank's biggest shareholder, and will see the fund convert its remaining holding of 379m units of Barclays' warrants into shares. Deutsche Bank and Goldman Sachs will then offer the stake - some 303m shares worth around pounds 750m - to institutional shareholders at a discount of 4% to the market price.

The relationship between Barclays and Qatar followed a fundraising in 2008 that allowed the bank to avoid receiving funds from the UK government. Qatar received warrants in the deal, selling some pounds 1.4m of them a year later. It is now disposing of the rest, but will still hold a 6.65% stake in the bank. Barclays was the biggest faller on the FTSE 100 index, sliding 13.7p, or 5.4%, to 243p.

Payments made by Barclays to Qatar as part of the fundraising are being looked at by the Serious Fraud Office and the Financial Services Authority. Barclays is also said to be coming under pressure to cut back on its investment banking activities. Nick Fletcher