U.S. hedge fund Paulson bets big against UK banks

Date: Wednesday, October 1, 2008
Author: Reuters.com

John Paulson, a U.S. hedge fund manager who gained a superstar reputation with a big bet against the U.S. housing market, was shown holding a $1.9 billion bet against United Kingdom banks as short sellers were forced to disclose their positions.

Paulson & Co., run by John Paulson and based in New York, said it had a 1.2 percent short position in Barclays, worth over 350 million pounds, a 1.8 percent short position in Lloyds TSB and short positions of just under 1 percent in Royal Bank of Scotland and HBOS.

The stakes were unveiled on Wednesday after the Financial Services Authority imposed a ban on short-selling financial stocks last Friday, which was followed by similar moves in the United States and elsewhere.

Other investors that were obliged to declare their short positions included Deutsche Bank, Barclays' investment business and UK hedge funds Lansdowne Partners and Odey Asset Management.

Paulson's fund has grown into a $33 billion (18 billion pound) giant after its founder earned more than $3 billion last year from an early bet against the U.S. housing market.

Short sellers have been blamed for targeting banks and driving down share prices to undermine confidence in companies and the financial system. The FSA barred investors from taking new short positions or adding to existing ones until mid-January. Many investors subsequently covered their short positions, though they can keep their positions as long as they are disclosed.

Lansdowne Partners unveiled a 0.5 percent short position in Barclays and a 1.6 percent short holding in Anglo Irish Bank.

U.S. investment firm AQR Capital showed short positions in Aberdeen Asset Management, Investec and Admiral.

Odey Asset Management also has a short position in Investec, while Deutsche Bank is short in Friends Provident, Steadfast International in Bradford & Bingley and Fortelus 5.3 percent short in London Scottish Bank.

Barclays has a 0.4 percent short position in St. James's Place, 60 percent owned by HBOS-through its asset manager Barclays Global Investors.