Marshall Wace made the largest short-selling wager against NatWest that the City regulator has ever recorded. This is because fears about the health and stability of the global banking sector cause volatility in the sector.
According to financial conduct authority disclosures, Marshall Wace, one the largest hedge funds in the world with assets of $61 billion, took a 0.61 percent net short position in shares held by the taxpayer-backed lender.
It is the largest short in NatWest stock that has been reported to the FCA. Since 2012, funds have been required to disclose short bets exceeding a certain threshold.
Marshall Wace revealed that it was creating a short against NatWest when panic spread throughout markets about the bank system’s health. Concerns were raised by the collapse of three US regional lenders, including Silicon Valley Bank.
The market turmoil also ravaged Credit Suisse . In a deal that was forced through Swiss authorities, UBS, the domestic rival to , took over Credit Suisse . Credit Suisse was at the center of the storm as investors feared years of scandals, setbacks, and financial ruin would weaken the bank and make it more vulnerable to the effects of developments in the United States.
The Bank of England insists that the British banking system remains safe. Despite this, the Bank of England and ministers arranged a rescue sale for Silicon Valley Bank’s British Division to HSBC for PS1 last month amid concerns that the collapse would create chaos for its 3,300 technology customers and start-ups.
NatWest has not been immune from market turmoil. NatWest shares were at 310p in February, but they have plunged by 14% to 266 1/2p, in conjunction with falls in other banks stocks.
Marshall Wace disclosed that it had a short position in NatWest on March 10, at 0.51 percent. This was on the same day that American regulators intervened and shut down Silicon Valley Bank.
Although the hedge fund disclosed shorts against NatWest in July 2016 and 2016, they were not as significant as the present bet. It is the only investor that has reported shorts against NatWest to regulator.
Marshall Wace was established 26 years ago by Ian Wace (60) and Sir Paul Marshall (63). The majority of Marshall Wace’s investment strategies use computers and are closely monitored by other stock market players.
About 41.5 percent of NatWest’s assets are owned by taxpayers. The PS45.5 billion bailout of the bank by the state in 2007 during the financial crisis gave taxpayers an 84% shareholding. The Treasury set a goal to return the bank to private ownership by 2026. NatWest stock is under pressure from the possibility of additional share dispositions by government.
Marshall Wace and NatWest declined to comment.