Barclays has been hit with a £40 million fine after abandoning a court battle with the UK’s financial watchdog over deals struck with Qatari investors during the 2008 financial crisis.
The bank had been due to challenge the Financial Conduct Authority’s (FCA) decision in the Upper Tribunal court in London this week.
But it said it had decided to drop the appeal, shortly before proceedings were set to begin.
The FCA previously found that the bank paid hundreds of millions of pounds in fees to certain Qatari entities in exchange for billions of pounds’ worth of investment to keep it afloat at the height of the financial crisis.
In particular, Barclays paid one Qatari entity £322 million in fees in exchange for its participation over a number of years, which it did not tell shareholders about.
The FCA said its conduct at the time was “reckless and lacked integrity” and that there was “no legitimate reason or excuse” for not being transparent.
However, on Monday, the regulator said it recognised that the decisions were made many years ago, when big and complex capital fundraises were taking place under considerable market pressure.
During the global financial crisis, NatWest, formerly the Royal Bank of Scotland, was bailed out by the government for billions of pounds.
The government also stepped in to take a significant stake in Lloyds, in a bid to stabilise the UK’s banking sector and stop the crisis escalating.
Barclays’ misconduct was serious and meant investors did not have all the information they should have had
Barclays avoided a taxpayer-backed rescue with a £4 billion investment deal.
The FCA’s fine has been reduced from £50 million to £40 million following Barclays’ decision to drop the appeal.
Steve Smart, the FCA’s joint executive director of enforcement and market oversight, said on Monday: “Barclays’ misconduct was serious and meant investors did not have all the information they should have had.
“However, the events took place over 16 years ago and we recognise that Barclays is a very different organisation today, having implemented change across the business.”
Barclays does not accept the findings of the decision notices and this has been acknowledged by the FCA
Barclays said it wants to “draw a line under” the issue “in view of the time elapsed since the events” took place.
However, it stressed that it does not agree with the FCA’s fine, despite deciding not to pursue an appeal in court on Monday.
A spokeswoman for Barclays said: “Barclays does not accept the findings of the decision notices and this has been acknowledged by the FCA.
“Notwithstanding the difference of view, Barclays has concluded that the interests of the bank, its shareholders and other stakeholders are best served by withdrawing the references.”
The bank said there would be no significant impact on its finances from the fine because it had already set aside money to cover the provisional penalty imposed in 2022.
