Barclays accepts £40m FCA fine in Qatar case

A court battle between Barclays and the City regulator over controversial deals the bank struck to avoid a taxpayer rescue during the 2008 crisis has been called off after the lender agreed to pay a £40 million fine.
The FTSE 100 bank had been set to fight a penalty from the Financial Conduct Authority in a three-week court case due to start on Monday, but said just hours before the hearing was due to begin that it had withdrawn its challenge.
Barclays said that although it did not accept the regulator’s findings, it wanted to “draw a line” under the matter “in view of the time elapsed since the events”.
The case would have thrust a 16-year-old controversy, which has already been the subject of separate criminal and civil proceedings, back into the spotlight. By accepting the penalty, Barclays has become the only bank to be fined by the regulator for the events of 2008, when the financial system was plunged into turmoil.
The scandal centres on two emergency cash calls that Barclays undertook in June and October 2008 with investors including Qatar. These transactions propped up Barclays by raising £11.8 billion and meant it avoided the fate that that befell Royal Bank of Scotland — now called NatWest — and Lloyds Banking Group, which were both partially nationalised in state bailouts.
However, Barclays has faced years of scrutiny over side deals it stuck that involved the bank making payments of £322 million to the Qataris. The authority alleges that Barclays breached listing rules by failing to publicly disclose the fees for the Qataris, amounting to conduct that was “reckless and lacked integrity”. Transparency about the payments “would have had a material impact on the terms of the capital raisings as disclosed”, the watchdog said.
It warned the bank 11 years ago that it was planning a £50 million fine and then confirmed the penalty in October 2022, when it said that Barclays was contesting its findings by referring the matter to the Upper Tribunal, a court that deals with appeals against regulatory decisions.
Barclays said on Monday “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 final fine is lower than the £50 million the regulator had originally proposed because the bank agreed to settle.
Steve Smart, the FCA’s joint executive director of enforcement and market oversight, 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.”
The Serious Fraud Office conducted a criminal investigation into the Qatari payments but its prosecution of the bank failed in 2018. Four ex-Barclays executives, including John Varley, the former boss of the bank, were also later acquitted. Varley, 68, had been set to appear as a witness for Barclays at the Upper Tribunal.
The Qatari fees were also the focus of a unsuccessful civil case against Barclays in the High Court brought by Amanda Staveley, a financier who had played a role in the October 2008 fundraising.
Sixteen years on from the fateful events of 2008 and the Financial Conduct Authority has finally succeeded in fining a bank for actions taken during the financial crisis.
For Barclays, the £40 million penalty brings the curtain down on years of regulatory wrangling.
It was in 2012 that both the Financial Services Authority, the predecessor of the FCA, and the Serious Fraud Office began investigations into two fundraisings in 2008 undertaken by Barclays with investors including Qatar.
The authority first proposed a £50 million penalty on the bank for failing to disclose details of its dealings with the Qataris in 2013, when it also told John Varley, the former boss who had led the bank during the crisis, that it was considering fining him £1 million. The proceedings were then paused while the SFO pursued criminal proceedings.
The SFO’s prosecutions ultimately failed. Charges against Barclays were dismissed in 2018 and Varley was acquitted of fraud charges the following year. Three other former senior executives of Barclays — Roger Jenkins, Richard Boath and Thomas Kalaris — were cleared in 2020 and the FCA subsequently abandoned its plan to fine Varley.
Yet Barclays’ dealings with Qatar continued to draw scrutiny. They were the subject of a civil claim brought by Amanda Staveley, a financier whose firm PCP was involved in one of the 2008 cash calls. The trial transfixed the City during the summer of 2020, when the High Court was told of sexist comments Barclays bankers had made about Staveley, including that she had “large breasts” and was “thick as shit”.
Although the judge dismissed Staveley’s £660 million damages claim in 2021, he found that Barclays was “guilty of serious deceit”.
The following year the FCA announced it planned to push ahead with a £50 million fine but that it was being challenged by the bank. The regulator separately also refused to approve Kalaris to hold a senior position in the financial services because he had given “untrue and misleading evidence” in a 2013 interview with the authority about the fundraisings.
An appeal by Kalaris against the FCA’s decision failed in August this year. The decision on Monday by Barclays to withdraw its challenge to the FCA’s fine, which was reduced by £10 million, was another victory for the authority. It finally ends regulatory scrutiny of the actions taken by Barclays in 2008, although Staveley’s PCP is still pursuing arbitration with the bank over claims relating to 2008. Barclays is defending the claims.