Barclays has been fined £50m ($56.5m) by the UK’s Financial Conduct Authority (FCA) for failing to disclose “certain arrangements agreed with Qatar entities “as part of capital raisings announced in 2008.

The FCA says the bank’s conduct was “reckless and lacked integrity”, but Barclays has referred the Decision Notices issued by the regulator to the Upper Tribunal, so any findings in the FCA’s notices are therefore provisional and reflect the FCA’s belief as to what occurred.

Capital raisings

The findings relate to capital raisings announced on 25 June, 2008 and 31 October, 2008. The FCA says Barclays paid one Qatar entity £322m ($362.6m) in fees over a number of years, but that the payments were “calculated specifically by reference to the Qataris’ financial demands for investing in the capital raisings, not the value of the advisory services that Barclays expected to receive”.

In a shareholder circular, Barclays disclosed it had entered an advisory agreement in June, but did not disclose the October agreement, the payments under the capital raisings, or their connection to the Qatar authorities.

Had the payments been disclosed, ‘”hey would have materially affected the terms of the capital raisings, more than doubling the disclosed level of payments due to the Qatar entities in connection with their participation in the June capital raising and tripling the payments due to them in connection with their participation in the October capital raising”, the FCA stated.

Highly relevant

The FCA considers this to have been highly relevant information to shareholders, investors and the wider market, especially against the background of a financial crisis where the disclosed costs were already perceived to be very expensive.

Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight, said:  “At the height of the financial crisis in October 2008, Barclays paid hundreds of millions of pounds in fees to certain Qatar investors so that they would contribute new capital. Barclays did not inform the market and shareholders about these matters as required. 

“Barclays’ failure to disclose these matters was reckless and lacked integrity and followed an earlier failure to disclose fees paid to Qatar investors in June 2008. There was no legitimate reason or excuse for failing to disclose these matters, certainly no basis for doing so because of the financial crisis. Due transparency is always critical to financial markets, especially in times of market or financial stress. These findings by the FCA will now be considered by the Upper Tribunal.”

Case paused

The FCA issued Warning Notices against Barclays in 2013, however the case was paused in relation to the resolution of other criminal proceedings brought by the Serious Fraud Office against Barclays and others. The case later restarted following the end of those proceedings in 2020.

The Upper Tribunal will determine whether to uphold the FCA’s decisions against Barclays or not, or make known if there are any other actions that should be taken by the FCA.

Read more about Barclays here:

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• Barclays to pay $361m in penalties after unregistered offers and over-issuing of securities
• Eleven firms fined $711m for “evasive communications” practices