The Serious Fraud Office (SFO) has charged Barclays for a second time over a $3bn loan the bank made to Qatar when Middle East investors bought shares in the bank to prop it up at the peak of the financial crisis.
The SFO has extended its case against Barclays’ holding company to Barclays Bank plc, the lender’s operating company. The decision raises the pressure on Barclays because banking licences and regulatory approvals are held at the operating level.
The additional charge is the latest move in an SFO case dating back to 2012. Last year, the SFO charged Barclays’ parent company, its ex-chief executive, John Varley, and three former senior bankers with offences linked to the bank’s £11.8bn emergency fundraising in 2008.
The SFO charged Barclays and the former employees with conspiracy to commit fraud by false representation. The offences carry a maximum prison sentence of 10 years for the individuals and a fine for the bank’s holding company.
Prosecuting Barclays at the operating level means that, if found guilty, the bank could face regulatory penalties, including withdrawal of its banking licences in the UK and other countries. In the UK the decision would be made by the Financial Conduct Authority and the Bank of England. Barclays’ high street operations in the UK would not be affected by a withdrawal of the banking licence because they will be transferred this year to a new company under plans to ringfence retail banking. However, investment banking, corporate lending and international operations would be affected.
The SFO said: “The charges relate to financial assistance Barclays Bank plc gave to Qatar Holding between 1 October and 30 November 2008, which was in the form of a $3bn loan for the purpose of directly or indirectly acquiring shares in Barclays plc.”
When the banking sector was threatened with collapse 10 years ago, Barclays raised capital from Qatari backers and other investors. The investment allowed the bank to avoid a government bailout that resulted in Lloyds Banking Group and Royal Bank of Scotland being part-nationalised.
The SFO has had the option of bringing a second charge against Barclays since charging the bank last June. Barclays said its operating and holding companies would defend the charges in court.
The charges against Barclays were the first criminal charges to be brought in the UK against a bank and its former executives for activities during the financial crisis.
Barclays is under different leadership and has spent the past few years trying to repair relations with regulators and the government since the Bank of England ousted Bob Diamond, Varley’s replacement as chief executive, in 2012. But for the SFO’s purposes the bank remains the same.
The SFO said on Monday that a date for the first court appearance in relation to the charge against Barclays Bank would be “set in due course”. The full trial is expected to start in 2019.