Could Barclays’ banking license be suspended over fraud charges?
While such a measure is considered highly unlikely - and shareholders remain sanguine - implications would be colossal
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Your support makes all the difference.The UK’s fraud watchdog on Monday morning announced that it had charged Barclays Bank over making a loan to Qatar at the height of the global financial crisis a decade ago.
The Serious Fraud Office already in June 2017 said that it had brought charges against parent company Barclays PLC in relation to a capital raising, which was conducted by the bank back in 2008.
At the time, the SFO appeared to have not yet made a decision as to whether it would also bring charges in relation to the loan against Barclays Bank – the unit of Barclays PLC that is licensed to provide banking services - but on Monday it said that it would be charging that unit with the same offence.
So what does this all mean and could this impact Barclays’ ability to operate here in the UK? We take a closer look.
What exactly is Barclays being accused of?
In 2008, during the financial crisis, Barclays accepted a £12bn loan from Qatar Holdings, which is an investment company owned by the state. Barclays in turn loaned Qatar $3bn. That loan may have broken the law if the SFO can prove that it was linked directly to the Qatari payment.
It helped save Barclays from having to turn to UK taxpayers for a bailout, but UK companies are usually not allowed to lend money that’s then used to buy shares in their own company.
A date for a first court appearance is yet to be set.
Might Barclays lose its banking license?
Theoretically, if Barclays is found guilty of having broken the law, it could have its banking license revoked. At this stage, that looks unlikely though.
There are numerous examples of banks that have been convicted of wrongdoings but have continued to operate as usual. The implications of losing its license would also be colossal, so Barclays is unlikely to let that happen without putting up a serious fight.
And investors appear pretty sanguine too. Shares in the bank shrugged off the latest charges. If shareholders really did think that losing its license were likely, then you’d expect to see Barclays’ share price in free fall.
On Monday, Barclays PLC and Barclays Bank said that they intend to defend the respective charges brought against them.
“Barclays does not expect there to be an impact on its ability to serve its customers and clients as a consequence of the charge having been brought,” the group said.
But Barclays does face other troubles…
What might prove more troublesome in the long run are some of the other charges which Barclays is facing.
Regulators are in the process of deciding how to respond to attempts by the group’s chief executive officer, Jes Staley, to unmask a whistleblower’s identity last year.
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