The U.K.'s Financial Conduct Authority plans to fine Barclays Plc £50 million ($55.8 million) for failing to disclose arrangements with Qatar during the bank's capital-raising in the middle of the 2008 financial crisis.
Barclays didn't fully disclose an agreement to pay advisory fees to Qatari investment vehicles as part of its efforts, the FCA said in a statement Friday. The regulator described the bank's conduct as "reckless" and lacking integrity. Barclays plans to fight the decision.
It's the second time a U.K. regulator has pushed for penalties against the bank after Barclays won a high-profile case against the Serious Fraud Office dismissing criminal conspiracy charges. The FCA is moving forward with a civil case and seeking to get around legal obstacles that impeded the SFO.
Barclays has referred the findings to a higher tribunal for reconsideration, a spokesperson for the lender said. It told the regulator it "did not breach its regulatory obligations and therefore no penalty should be imposed," according to the FCA filing. The decision, including the fine, won't take effect until this process concludes.
The bank's shares were down as much as 2.1% in London trading.
The investigation related to the bank's desperate attempts to avoid nationalization, a fate imposed on two competitors as the financial crisis tore into balance sheets in 2008. Faced with diminishing capital reserves, executives turned to the gas-rich Gulf nation of Qatar for investment. The bank avoided a government bailout, but the deal has been a legal headache ever since.
"Barclays paid hundreds of millions of pounds in fees to certain Qatari investors so that they would contribute new capital," Mark Steward, FCA executive director of enforcement and market oversight, said in the statement. "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 Qatari investors in June 2008."
The FCA issued warning notices against Barclays in 2013 but the case was paused until after the end of the SFO case, which was dismissed after prosecutors failed to demonstrate that senior executives — the so-called controlling mind — of the bank were involved.
The FCA said it planned to fashion a "special rule of attribution" so as to avoid such a determination. Barclays called it "confusing and unworkable."
— With assistance from Leonard Kehnscherper.
