The UK’s Financial Conduct Authority (FCA) has fined Barclays £40 million ($50.9 million) for failing to disclose certain arrangements made with Qatari investors during the 2008 financial crisis.
The fine relates to the bank’s efforts to raise capital to avoid a government bailout during the height of the global financial turmoil.
In its ruling, the FCA found that Barclays had acted recklessly and lacked integrity when it raised £11.8 billion through share sales in June and October of 2008. The bank’s fundraising included undisclosed fees paid to Qatari investors, which were not revealed to other shareholders at the time, violating the UK’s listing rules. Critics had pointed out that the Qatari deal involved fees significantly higher than those paid to other investors, including those from China, Singapore, and Abu Dhabi.
The FCA had initially imposed a £50 million fine in 2022, which Barclays appealed. However, the bank withdrew its appeal shortly before it was due to be heard on Monday. Despite continuing to dispute the regulator’s findings, Barclays chose to pay the fine, stating that the decision to withdraw the appeal was made in the best interests of the bank and its shareholders, and that the financial impact of the fine would be minimal.
The controversy surrounds the fees paid to Qatari investors, which amounted to £322 million. The FCA described Barclays’ failure to disclose these payments as misleading, and said it had led to a lack of transparency for investors. The bank had sought to avoid a government bailout, which would have limited its ability to pay dividends and executive bonuses, while making the deal with Qatar, which required higher costs that were not disclosed to other shareholders.
The investigation into the deal had been ongoing since 2013 and had involved scrutiny from both the FCA and the Serious Fraud Office (SFO). However, the SFO’s case against Barclays for conspiracy to commit fraud was dismissed in 2018, allowing the FCA to resume its investigation.
In its statement, Barclays emphasized that the bank had changed significantly since the events of 2008, with new management and a revised approach to governance. Despite the fine, Barclays’ share price rose 1.6% on Monday, reflecting market confidence in the bank’s current direction. The FCA acknowledged that Barclays had since implemented changes across its operations but emphasized the importance of transparency in capital raising for listed firms.
CNBC, the Financial Times, and the Guardian contributed to this report.
