Global shares: Barclays shares fall as the collapse of the UK specialist mortgage lender revives concerns

Barclays shares fell on Friday after media reported that it and other banks face potential losses from the collapse of British mortgage lender Market Financial Solutions Ltd, amid wider concerns about lending conditions and the fast-growing private finance market.London-based MFS specializes in complex real estate-backed loans. According to previous media reports and court documents seen by Reuters, the country had sought administration after running into trouble.

Barclays, Santander and Jefferies are among the exposed lenders, Bloomberg reported on Thursday. The banks declined to comment. Jefferies shares in the US fell 8% before closing down 3.5% on Thursday.Investors are on alert for any sign of deteriorating credit conditions and cracks in credit markets, with some of this fear centered on a private lending boom, with specialist funds lending directly to companies.

The collapse last year of US auto parts supplier First Brands and auto subprime lender Tricolor added to these concerns, although traditional banks were among the most vulnerable.

Barclays shares were down 1.6% by 1235 GMT, underperforming the broader FTSE 100 index, which rose 0.4%.

‘REAL AND SERIOUS CONCERNS’

MFS, based in London’s Mayfair, described itself as a specialist provider of mortgage lending and bridging finance, with net assets of £15.9 million and 149 employees as of December 31, 2024, according to its most recently filed accounts. MFS creditors Amber Bridging Limited and Zircon Bridging Limited had separately applied for an administration order against MFS, according to court documents dated February 24 and reviewed by Reuters, citing “real and “Serious concerns about the mismanagement of the company” and entities in the wider MFS Group.

Amber Bridging and Zircon Bridging, named as creditors of MFS in the court documents, said there were irregularities in payments due to their accounts and asked for independent administrators to be appointed.

MFS Ltd did not immediately respond to a request for comment.

The Times reported that Barclays has a 600 million pound ($809.70 million) exposure to MFS.

Citi analysts said this figure could warrant some caution as banks typically sell some or all of their exposure when making such loans.

“Arranging a loan is very different from holding that risk on the B/S (balance sheet),” Citi said.

“It is also not clear whether/how much can be provided (if anything).”

($1 = 0.7410 pounds) (Reporting by Samuel Indyk, Lawrence White and Sam Tobin; Additional reporting by Tommy Reggiori Wilkes and Jesus Aguado; Editing by Amanda Cooper and Jane Merriman)