Barclays will pay a fine of £40m for “reckless” failures to disclose a fundraising deal with Qatar at the height of the financial crisis, after the British bank agreed to withdraw a legal challenge against it.
The FTSE 100 bank effectively won a discount of £10m by challenging the fine, but was found by the regulator to have committed serious misconduct.
Barclays withdrew an appeal shortly before it was due to be heard on Monday by the upper tribunal, a court in London – although it said it still disputed the findings.
The Financial Conduct Authority (FCA) first imposed a £50m fine in 2022 after a long examination of the hurried deals struck as the British banking system teetered on the edge of collapse during the financial crisis of 2008.
The UK government was forced to bail out Lloyds Banking Group and the former Royal Bank of Scotland, now known as NatWest Group, to prevent the crisis escalating further. Barclays narrowly avoided UK government intervention thanks to the deal with the Qatari state, as part of efforts in June and October 2008 to raise £11.8bn. The Qatar Investment Authority still owns 2.9% of Barclays.
That deal included a fee paid to Qatar of £322m, which critics saw as a way of Barclays giving a steep discount that was not offered to other shareholders. The FCA on Monday said that failure to tell shareholders at the time was “misleading, false and/or deceptive”.
The Barclays board did not want to accept government ownership because that would limit its ability to pay dividends and executive bonuses. However, they also knew that the Qatari demands were “likely to be unacceptable to Barclays’ existing shareholders” because they would cost more than the government funding, the FCA said.
The separate fees given to Qatar were not disclosed, despite advice that they should be. The FCA said Barclays showed a “failure to act with integrity”.
The FCA first announced that it was looking at the deal in 2013 but put enforcement on hold while the Serious Fraud Office brought a case for conspiracy to commit fraud and the provision of unlawful financial assistance. The SFO lost that case in 2018 and the FCA restarted its case, and found that Barclays misled other investors by failing to disclose the terms of the Qatari deal.
The deal kept the bank out of UK government hands, but it has struggled with a string of challenges since. John Varley, the chief executive who led the lender through the financial crisis and who would have appeared at the tribunal this week, handed over to Bob Diamond in 2011. However, Diamond was forced out within 18 months after the bank was accused on manipulating a key interest rate benchmark.
A later successor as chief executive, Jes Staley, was forced to resign in 2021 and banned from holding senior City roles last year after misleading regulators over the strength of his friendship with Jeffrey Epstein, the convicted paedophile.
Steve Smart, the joint executive director of enforcement and market oversight at the FCA, said: “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. It is important that listed firms provide investors with the information they need.”
Barclays said it continued to dispute the FCA’s findings even as it agreed to pay £40m, which it had already accounted for in 2022. The bank’s share price rose by 1.9% on Monday to £2.62, just shy of its peak last week of £2.64, the highest point since the summer of 2015. The bank was valued at £37bn on Friday.
In a statement on Monday, Barclays said it “does not accept the findings” outlined in decision notices by the FCA.
“In view of the time elapsed since the events, Barclays wishes to draw a line under the issues referred to in the decision notices and has decided not to contest the decision notices further,” the bank said.
“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.”
