The UK’s financial watchdog has fined Barclays £40m over conduct during a fundraising drive in 2008 which it has called “reckless” and lacking integrity.
The Financial Conduct Authority (FCA) says the bank failed to disclose arrangements with Qatari investors when it was looking to raise money at the height of the financial crisis.
Barclays had been due to challenge the case brought by the regulator in court this week.
While the bank has said it does not agree with the FCA’s findings, it has decided to drop the appeal, adding it wants to “draw a line” under the matter.
The FCA had found previously in 2022 that the bank had paid hundreds of millions of pounds in fees to certain Qatari investors so that they would contribute new capital.
It said that Barclays had not informed the market or shareholders of these matters as it should have.
At the time, this giant fundraising exercise allowed Barclays to escape having to be rescued by the government, unlike competitors such as Royal Bank of Scotland and Lloyds.
Following the collapse of Lehman Brothers in the US in 2008, the whole financial system was in jeopardy.
Barclays’ fundraising efforts were subject to immense scrutiny not only from regulators, but the wider public as it faced legal challenges.
The bank looked to raise billions of pounds from sovereign wealth funds in China, Japan, Singapore and the Middle East, although the FCA had also alleged that it failed to disclose that it was paying higher fees to Qatari bodies.
For example, the bank paid one Qatari entity some £322m in fees for its participation over a number of years.
The Serious Fraud Office had alleged these were undisclosed extra fees demanded by the Qataris, paid through side agreements for what were described as advisory services.
But three former senior Barclays executives were acquitted after they became the first bankers to face a jury around criminal allegations centring on the 2008 crisis.
Charges against Barclays were also dropped prior to that trial.
‘Serious’ misconduct
The FCA has scaled back the £50m fine that it had originally issued in 2022.
Steve Smart, 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.”
A spokesperson for Barclays said that “in view of the time elapsed since the events, Barclays wishes to draw a line under the issues” referred to by the FCA.
“Barclays does not accept the findings of the decision notices and this has been acknowledged by the FCA,” they 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.”
