Barclays and four ex-bankers charged with 2008 fraud

Barclays sued for billions over boom-era mortgage bonds

23 December

Barclays is facing a US court claim worth billions of dollars over the boom-era packaging and sale of mortgage-backed securities, says The Guardian.

The case is being brought by the Department of Justice (DoJ) and marks "the first time an institution had failed to reach a settlement with the US authorities" over the sale of mortgage bonds.

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Already DoJ has recouped $48bn (£39n) from banks including JP Morgan, Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch and Citigroup.

It is also being reported today that it had agreed penalties worth a total of $12.5bn (£10bn) with Deutsche Bank and Credit Suisse – and Royal Bank of Scotland is locked in negotiations that are expected to yield a penalty of up to $11bn (£9bn).

But Barclays has refused to accept wrongdoing in relation to 36 mortgage bond deals worth $31bn (£25bn) that were sold before the financial crash.

At the height of the boom banks made big profits by "packaging" huge volumes of mortgages, including those loaned to borrowers with poor credit histories, and "syndicating" them – that is, selling them on in a piecemeal fashion to investors.

These bonds were priced on the basis that they were ultra safe, with the assumption that the risk was sufficiently diversified across so many loans. When the market began to turn in 2007, this assumption was proved wrong.

The DoJ said: "Barclays fraudulently sold investors [bonds] it knew were likely to fail, all the while telling investors that the mortgages backing the securities were sound."

Bill Baer, principal deputy associate attorney general, added: "The widespread fraud that investment banks like Barclays committed… injured tens of thousands of investors and significantly contributed to the financial crisis of 2008."

In a statement, Barclays said it "rejects the claims made in the complaint", which it said are "disconnected from the facts".

The statement added: "We have an obligation to our shareholders, customers, clients, and employees to defend ourselves against unreasonable allegations and demands."

Barclays sells French retail banking assets to AnaCap

13 December

Barclays has agreed the sale of its French retail banking arm to the European private equity investor AnaCap Capital Partners for an undisclosed sum.

Included in the transaction are "74 retail bank branches, a life insurance business, as well as wealth, investment management and brokerage operations," says the BBC.

Discussions on a prospective deal began in April. Barclays says the sale will bring savings of £130m a year for its "non-core" business, according to the Financial Times.

It will also reduce "risk-weighted assets" – the balance sheet assets against which cash reserves must be held – by around £500m.

Barclays has been restructuring since last year under its new boss Jes Staley with the idea of focusing on a global investment banking business based out of New York and a retail banking business in the UK.

"It has previously sold its Barclaycard credit card operations in Spain and Portugal, its stake in Barclays Africa, and its wealth and investment management business in Singapore and Hong Kong," says the BBC.

Corporate and investment banking operations in France were not included in the sale to AnaCap.

Staley, who is group chief executive at Barclays, said: "This is another positive step in reducing our non-core unit, creating a more focused, simpler Barclays, and thereby releasing the strong performance of our core business.

"The agreement to sell our French business completes Barclays' exit from retail banking in continental Europe."

The Bank's shares were up 0.4 per cent to 228.4p in afternoon trading.

Barclays accused of hiding thousands of Libor documents

1 December

Barclays has revealed tens of thousands of new documents relating to its traders' manipulation of interest rates, for which it has was fined £290m four years ago.

In a preliminary hearing yesterday for a private legal claim brought by businessman Asif Aziz, who is seeking compensation over two Libor-related products he bought collectively worth £55m, lawyer Stephen Davies revealed details of 35,000 new documents relating to the Libor scandal that were not previously disclosed.

Davies said the material compromises around 300 audio files and transcripts, 33,000 electronic documents and communications and 1,650 hard-copy documents that Barclays passed to the Serious Fraud Office and US regulators.

He added that his client was "'entirely in the dark as to how such a vast body of documents' had not previously been disclosed to the authorities and argued Barclays should be required to hand over the new material to the claimant", says The Times.

Robin Dicker, for Barclays, said the bank was still reviewing the documents and would not be in a position to release them to Aziz's legal team until February at the earliest.

Barclays denies any wrongdoing and a trial is scheduled for 2018.

The bank reached a settlement with both UK and US regulators over Libor fixing in 2012, which saw it landed with a £290m fine. This is the second time since then it has revealed new evidence that was not disclosed to the regulators

"In October 2013, Barclays said it had unearthed documents not previously shown to the authorities before the £290 million settlement," says the Times.

The case continues.

Barclays' focus may shift to Europe after hard Brexit

28 October

Barclays could shift its focus away from London if a hard Brexit compromises its passporting rights, chief executive Jes Staley says.

Speaking after the release of the bank's latest quarterly results, Staley said the group was "looking at our options" to mitigate the effects of any EU exit deal that would see the UK leave the single market.

"We are the largest underwriter of European sovereign debt and we want to maintain that position. We… are going to make sure we can prosecute strongly across continental Europe," he said.

The Times says Barclays has "previously said Ireland or Luxembourg could become more important after Brexit if banks are blocked from dealing with the European Union". The bank already has banking licences in both countries.

Under passporting rules, a financial institution only has to base in an EU country to operate across the whole continent freely, a process that has helped the City become a global financial powerhouse.

US banks in particular have chosen to have their headquarters in London to benefit from the shared language, strong regulation and liquid markets while at the same time enjoying unfettered access to the largest single market in the world.

However, if a Brexit deal shuts the UK out of that market and ends those rights, the banks could decide to move their base to the EU, which could cost thousands of jobs.

As Barclays already has licences in Europe, it may find it can trade freely whatever the Brexit outcome. It is also possible a deal will be struck that maintains passporting as Chancellor Philip Hammond has pledged to put the City at the heart of negotiations.

European Central Bank council member Philip Lane emphasised the risk to Britain's global finance hub if it did not agree a soft Brexit, says Reuters.

"If the UK-EU negotiations deliver an agreement that effectively preserves the single passport for UK-resident entities selling into the EU, the net impact… might be quite minor," he said.

"However, in scenarios in which UK-resident firms are no longer treated as equivalent to EU firms for regulatory purposes, it is likely that significant migration of financial activity from the UK to the EU will occur."

Barclays profits knocked by £600m PPI provision

27 October

Barclays has reported a mixed set of results, including a fall in profit in its core divisions because of another £600m PPI bill.

However, shares have risen 1.7 per cent, to 185p by lunchtime, after overall pre-tax profits beat analyst estimates and capital reserves were maintained.

The results revealed a near eight per cent drop in net operating income for the third quarter, "while operating expenses increased slightly", reports the Financial Times.

Among the costs was the new compensation provision over past mis-selling of PPI, following this summer's extension of the deadline for claims to 2019.

As a result, "net profit attributable to shareholders inched down to £414m", says the FT.

Barclays points to a positive trend in underlying profit to £1.7bn from £1.4bn last year, excluding one-off expenses. Pre-tax profits rose 34 per cent to £837m.

According to the bank's detailed results summary, however, profit before tax in its "core" business slumped 32 per cent year on year.

The overall earnings rise was instead the result of a £650m reduction in losses attributed to "non-core" operations, which Barclays hopes to offload by the end of next year as a result of falling costs.

Laith Khalaf, a senior analyst with Hargreaves Lansdown, told the BBC: "Barclays continues to pull the old 'good bank, bad bank' routine, though soon it's going to need to find a different tack because the bad bank is being consigned to the history books."

Among the positives was an increase of 70 per cent in pre-tax profit in Barclays' international and investment arm, which the FT says reflected the weak pound and bumper bond trading.

On the other hand, the bank is now facing a hefty black hole in its pension fund, which swung from a £800m surplus to a £1.1bn deficit and means its capital reserve ration remained unchanged at 11.6 per cent.

Investors will be pleased excess capital is at least stable, however, as this bodes well for future dividend payouts.