Barclays fined for dodging a bailout

That’s regulators for you. Ask most people which banks deserved a fine for their exploits during the 2008-2009 financial crisis and you’d bet on them naming two.
First, Royal Bank of Scotland for the derring-do of Fred Goodwin: the bloke who bought ABN Amro and got into such a mess that the lender, now known as NatWest, required a £45.5 billion taxpayer bailout. Then, HBOS, whose quartet of banking geniuses — James Crosby, Andy Hornby, Peter Cummings and Lord Stevenson of Coddenham — oversaw such a disaster that, even after being rescued by Lloyds Banking Group, it needed £20.3 billion of public money to save the black horse from the knacker’s yard.
So, given the choice between those two, look which bank the Financial Conduct Authority went after: Barclays, the one that did all it could to avoid becoming a drain on the public purse. Which is, of course, the problem. It tried a bit too hard, via a deal with the Qataris that broke disclosure rules, with the FCA finding its actions were “reckless” and “lacked integrity”. The upshot? A mere 16 years after the event, the FCA has levied its only fine against a bank for its financial crisis conduct: a £40 million penalty.
No question, too, that in any strict application of the rules, Barclays is bang to rights. In June and October 2008, it had two emergency cash-calls — £4.5 billion and £7.3 billion — with the Qataris subscribing for up to £2.3 billion of each. In neither case did the bank disclose that, in return for the money, Barclays had agreed to pay the Qataris a total of £322 million in fees. Ostensibly, they were for helping the bank expand in the Gulf. But the “advisory agreements” were on such nebulous terms that the fees look like a bung.
The details of what Barclays got up to aren’t new. In 2013, the FCA proposed fining Barclays £50 million. But the action was paused for two legal cases. First, the Serious Fraud Office’s attempt to nail the bank, its boss at the time, John Varley, and three other individuals: Roger Jenkins, Thomas Kalaris and Richard Boath. None were convicted. And, second, for a related action by the financier Amanda Stavely. She claimed her client — Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, the Man City owner — got worse terms than Qatar in a Barclays fundraising. Staveley lost her case in 2021 but not without the judge finding the bank “guilty of serious deceit”.
Still, FCA penalties have a lower burden of proof. Barclays has spent the past two years saying it would contest the fine. But, on the eve of its appeal, it’s now settled for £10 million less to “draw a line under the issues”. Yet, even if its shares rose 2.5 per cent to 263¾p, you can see why it says it still “does not accept” the FCA’s “findings”.
As the SFO case disclosed, even Barclays executives were unhappy about the Qataris’ fees: Boath called it a “f***ing horrible advisory agreement”. But, as the FCA notes, the “backdrop” was a “financial crisis that had engulfed the global financial system”. By October 2008, Lehman Brothers had gone bust. And, in the run-up to the second cash-call, the UK, US and Japanese stock markets had crashed 20 per cent in a week, the government had injected £37 billion into other UK banks, and Barclays had seen its shares fall by 44 per cent.
Barclays had the choice of joining the queue for a strings-attached UK bailout or finding a self-help fix. Sure, it cut corners. But its Qatari shenanigans arguably saved both the taxpayer and its shareholders from something far worse.
Some telly has confusing plots. Take the drama at ITV. Apparently, it’s “delivering long-term value for shareholders”. How long before we get to that bit in the script? Since Dame Carolyn McCall became the star turn in January 2018, with the shares at 165p, they’ve dropped by a quid. Well, at least until a weekend story from Sky News, dangling private equity firm CVC and a European broadcaster as possible bidders, lifted them 8.6 per cent to 71¼p. Who yet knows if that’s where the story is heading but it does need livening up.
McCall has not had the easiest gig. Yet her strategic direction looks fine: a studios wing, with more than half last year’s £4.26 billion total revenues, making hit programmes, including Mr Bates Vs The Post Office for its own channel, as well as Rivals for Disney+ and Ludwig for the BBC; a growing streaming service in ITVX, increasing digital ad sales; and an attritional, linear TV arm, still capable of nine million viewers for I’m a Celebrity.
Still, what is the catalyst to buy into it? A fortnight ago, McCall took 13 per cent off the shares after a third-quarter update disclosed guessable stuff about the impact of the Hollywood writers and actors’ strike and a shortfall in ad revenue against last year’s Rugby World Cup. And, with the shares bombed-out, its Studios arm alone accounts for most of its £2.7 billion market value.
All3Media was sold to RedBird IMI earlier this year for a reported £1.15 billion. That’s roughly half the size of ITV Studios, which Shore Capital analysts think worth £2.3 billion. Even adjusting for ITV’s net debt of £437 million, ITVX and the legacy commercial wing are now largely in for free. Unless McCall does more to make this picture clearer, a bidder will do it for her.
Accounts delayed after a company finds that a single staffer “intentionally” hid at least $132 million of expenses relating to customer deliveries. And Macy’s shares down just 2.3 per cent, despite no one noticing for three years. Yes, the missing sum was out of a total $4.36 billion. But the market reaction seems too relaxed. What’s this farrago say about the department store group’s controls? They look wrong on many levels.