Neil Hall/ReutersThe Barclays headquarters in London.LONDON – Barclays said on Monday that Britain’s financial regulator had concluded the bank acted “recklessly” when it raised emergency money from Qatari investors during the financial crisis and could be fined $79 million.
Barclays might be fined 50 million pounds because it breached certain listing rules, including the need to act with integrity toward shareholders, as part of the agreement with Qatar Holdings in 2008, according to a so-called warning notice, which is not final, issued by the Financial Conduct Authority on Friday.
Barclays disclosed the information on Monday in its prospectus for its coming £5.8 billion rights issue and said it continued to contest the regulator’s findings. An investigation by the authority focused on £322 million in fees that were paid over five years as part of the fund-raising but were not disclosed publicly at the time.
“The warning notices conclude that Barclays and Barclays Bank were in breach of certain disclosure-related listing rules and Barclays was also in breach of listing principle 3 (the requirement to act with integrity toward holders and potential holders of the company’s shares),” Barclays said in the prospectus. “In this regard, the F.C.A. considers that Barclays and Barclays Bank acted recklessly.”
Unlike Royal Bank of Scotland Group and Lloyds Banking Group, which received government bailouts, Barclays tapped investors in the Middle East to inject more capital when the financial markets froze and regulators started to demand larger buffers against losses.
Barclays said last year that the British authorities had started an investigation into payments to Qatari investors as part of the capital-raising. Separate investigations into the matter by Britain’s Serious Fraud Office, the United States Justice Department and the Securities and Exchange Commission are continuing, Barclays said in the prospectus.
“It is not possible to estimate the full impact on the group if the final conclusion of these matters is adverse,” it said.
Barclays has already set aside large sums for different legal investigations, including a $450 million settlement last year for accusations that it tried to manipulate the London interbank offered rate, or Libor. It was also among a group of British banks fined for selling a certain insurance product to customers who were not be eligible for it.
Barclays also disclosed in its prospectus on Monday that income at its investment banking operation in July and August was “significantly below” the level in the two months a year earlier, mainly because of its bonds, currencies and commodities business.
With the planned rights issue announced in July, Barclays bowed to pressure from British regulators, which had demanded the bank should improve its so-called leverage ratio, a measure of how much borrowed money a bank uses.