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Barclays has abandoned a legal challenge against the UK financial watchdog’s punishment over its alleged failure to disclose payments to Qatari entities that helped the bank avoid a bailout during the 2008 financial crisis.
The Financial Conduct Authority said on Monday it had fined Barclays £40mn after finding that the UK bank’s “conduct in its October 2008 capital raising was reckless and lacked integrity”.
Barclays had been due to challenge the FCA fine at London’s upper tribunal in a court case starting on Monday, in which the bank’s former chief executive John Varley was set to appear as a key witness.
The court case was cancelled after Barclays withdrew its challenge, saying it wanted to “draw a line under the issues” despite not accepting the FCA’s findings.
The FCA had previously alleged that Barclays breached the UK’s listing rules by failing to disclose it was paying higher fees to Qatari investors than to those from other countries including China, Singapore and Abu Dhabi when it raised £11.8bn through two share sales in 2008.
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.”
The move closes one of the final episodes in a legal saga that has swung back and forth for more than a decade, leaving the reputations of one of Britain’s biggest banks and the country’s main financial watchdogs in the balance.
Smart said it was “important that listed firms provide investors with the information they need”, but added that “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”. The watchdog reduced its fine from the £50mn it initially announced in 2022.
The bank said: “Barclays does not accept the findings of the decision notices and this has been acknowledged by the FCA.” But it added: “In view of the time elapsed since the events, Barclays wishes to draw a line under the issues referred to in the decision.”
The £11.8bn emergency capital raise during the 2008 financial crisis helped the bank avoid a government bailout. But it included a controversial arrangement with the Qatari sovereign wealth fund, to which the bank agreed to pay hundreds of millions of pounds in fees.
Barclays has faced several legal challenges over the £322mn it paid Qatar, and regulators have questioned whether the money was in exchange for services it received or as a reward related to the share transaction that was hidden from other investors.
The controversy over the actions taken by Barclays after the collapse of Lehman Brothers caused a global financial meltdown in 2008 has prompted criminal and regulatory investigations and two failed prosecutions.
Varley faced the ignominious status of being the first chief executive of a major bank to face a jury over events during the financial crisis but was ultimately acquitted, and charges against Barclays itself were dropped before trial. The case helped prompt an overhaul of corporate criminal liability in the UK.
Former bankers Roger Jenkins, Thomas Kalaris and Richard Boath were also acquitted of criminal charges in 2020.