Barclays, winding down its physical bullion business in the face of tough market conditions, will do well to find a buyer for its interest in a gold vault near London, market participants said.
The vault, at an unknown location, was designed and built by global logistics and security company Brinks, which was said to have leased it to Barclays. Barclays would not comment, while Brinks was not available.
One senior market source said Barclays will likely simply wind down the contract with Brinks and write down the business as a loss.
Market conditions in the precious metals space are becoming more challenging by the day, with operations hampered by increased compliance and regulations.
"It [market] is a nightmare," a banker said. Anyone considering the purchase would be "someone who really has money to burn".
Platts reported late January Barclays was set to exit the precious metals sector to concentrate on its core activities.
"It is really tough out there, every dollar counts," a senior precious metals trader said. "People need to focus on their own business."
A second senior trader said: "There is always a price...so maybe it will be cut-price."
In January, there were reports ICBC Standard Bank took on the lease of Deutsche Bank's London gold and silver vault.
As such, participants discounted the bank from taking part in any possible auction of the Barclays vault.
"They do not need it," said one senior bullion source. "They have enough capacity." Others indicated that another Chinese bank could be eying the lease, although no names were given.
