Barclays and four ex-bankers charged with 2008 fraud

Barclays in £390m 'non-core' asset disposal

5 October

Barclays has announced another "non-core" asset disposal, selling off its Egyptian arm as it takes another step towards the leaner vision outlined by chief executive Jes Staley.

The sale brings to an end 150 years of history in the North African country, says the Financial Times, which says buyer Attijariwafa Bank, of Morocco, paid around $500m (£390m). The Guardian quotes a much lower price tag of around $400m (£313m).

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According to the FT, the disposal of the 56-branch strong unit, which employs 1,500 people, will "slightly boost" capital levels and reduce the asset pool against which cash reserves must be held by around £2bn.

Barclays' arm in Egypt is separate from its much larger African subsidiary, which is listed in South Africa and is mostly made up of former South African bank Absa.

It has already sold 12 per cent of that business, but is struggling to secure a buyer for the remainder after a consortium put together by ex-Barclays chief executive Bob Diamond fell apart.

The bank is also trying to exit another subsidiary in Zimbabwe, which the FT says will be a trickier sell, while closer to home, it is in talks to sell off its French operations.

It's all part of a plan to reconfigure Barclays as a much smaller business based around a retail bank in the UK and an investment bank in the US.

Staley said: "Today’s announcement demonstrates our continued focus on improving the group’s returns and our ability to execute our strategy quickly."

Barclays shares were up 1.3 per cent in late afternoon trading, against a 0.6 per cent fall in the wider FTSE 100.

Barclays pays out another £77m over Libor

10 August

Barclays has become the first bank to settle claims from individual states in the US relating to its fixing of interbank interest rates.

The UK lender will pay $100m ($77m) to 43 states and the District of Columbia after discussions with a working group of state attorney generals led by prosecutors in New York and Connecticut, reports the Financial Times.

"We believe this settlement is in the best interests of our shareholders and clients, and allows us to continue to focus on the future and serve our clients," said the bank.

"As part of the settlement, Barclays neither admitted to, nor denied, the allegations of its involvement in manipulating Libor or Euribor," the paper adds.

But the BBC reports the bank did admit "what had already been firmly established; that some of its dealers rigged Libor rates in a system of mutual back-scratching between 2005 and 2009".

Libor and Euribor, the London and Euro interbank offered rates, are the benchmarks that set the cost for lending between banks. They are used as the basis for pricing trillions of pounds of transactions and borrowing rates around the world.

Before the fixing scandal was uncovered, 16 banks set the rate each day from an average of their own submissions. Traders were found to have artificially set these submissions higher or lower to benefit their own trading positions at the expense of clients.

New York attorney general Eric Schneiderman said: "There has to be one set of rules for everyone, no matter how rich or how powerful, and that includes big banks and other financial institutions that engage in fraud or impair the fair functioning of financial markets."

It's not the first financial penalty Barclays has faced over the Libor scandal.

In 2012, it paid out £290m in fines to the US Justice Department, the US Commodity Futures Trading Commission and the UK's Financial Services Authority relating to Libor manipulation.

It was later forced to pay another $60m (£46m) over breaches of its agreement with regulators to avoid criminal prosecution. Last year, it paid out $120m (£92m) to settle a class action lawsuit brought by "over-the-counter investors", says Reuters.

Barclays could still face additional costs after a US judge ruled the 16 banks involved in the scandal could face competition charges, which have the potential to treble the US fines.

Last month, a group of traders involved in setting and submitting the Libor rate were jailed at Southwark Crown Court in London, in what was described as a "major victory" for the UK's Serious Fraud Office.

Barclays presses on with reforms despite Brexit and profit plunge

29 July

Barclays chief Jes Staley has said he will press on with a radical reshaping of the bank, despite a huge hit to underlying profits and assumed headwinds caused by the Brexit vote.

In half-year results this morning Barclays revealed group profit had tumbled 21 per cent to £2bn. This figure was dragged lower by a huge £1.9bn loss in a so-called "non-core division" of soon-to-be sold assets as restructuring costs bite, The Guardian reports.

Among these is the profitable African arm that Barclays announced it was selling earlier this year, as part of a turnaround that will focus on a UK-US investment bank and a retail banking unit at home.

What the bank terms its "core" continuing operations profits actually rose 18.5 per cent to £4bn. Its consumer and credit unit was the "star performer", notes the Financial Times, with the UK operations swinging back into the black with a profit of £376m after heavy cost-cutting.

Barclays has in effect become the "Brexit bank", says James Moore in The Independent, with its own "Barclexit" leaving a "smaller, less outward looking" group – but one that might be more proportionately profitable.

"The reason Barclays is paying such a heavy price for Barclexit is that these businesses are either being run off or sold off on the cheap. Walking away comes at a price," Moore adds.

Staley is unconcerned and sees "no reason to adjust his strategy or its pace of delivery", says the FT.

He remains "confident this is the right plan for Barclays" and that the effects of Brexit, including a hit to interest and therefore profit margins, did not change that view.

The referendum result had "paused" some customer activity, Staley added, but this is not expected to last and is not by itself a signal of a broader economic downturn. "Normally economic crises are not created by a short-term pullback in demand for credit," he said.

Shares in Barclays were 7.5 per cent higher in mid-afternoon trading in London, to 157.85p.

Barclays could bank £133m from sale of ATM operator

22 July

Barclays is set to be the biggest winner from a sale of the UK's largest payments processing business to MasterCard, which could be worth ultimately in excess of £850m.

Debt and credit card provider MasterCard has paid an initial £700m to buy VocaLink from a consortium of 18 UK banks and building societies. If earn-out targets are met, a further £169m could be paid to the shareholders, who will retain a 7.6 per cent interest for at least three years.

As the largest stake, Barclays stands to bank up to £133m, says The Times. At the other end of the scale, the Co-operative stands to make £28m while the likes of Lloyds, Royal Bank of Scotland and HSBC and Santander will also net big payouts.

The competition regulator ruled last year that the banks and building societies should sell VocaLink to enable more competition in the payments market.

At the moment, says the Financial Times, Visa dominates the market and MasterCard controls a share of around five per cent. The buyout will hand it control of the vast majority of wages transfers, direct debits and ATM withdrawals.

VocaLink owns Bacs, which transfers payments between bank accounts, Link, which runs the largest nationwide network of cash machines, and online banking payment service Faster Payments.

In the UK, VocaLink processes around 90 per cent of salary payments, 70 per cent of household bill payments and almost all state benefits, totalling 11 billion transactions a year worth £6trn. It generated revenues of £182m last year.

It also owns Zapp, a nascent mobile banking processing system, and is rolling out services in Thailand, Singapore and the US.

Adding wider significance to the deal, this is the second big-ticket buyout of a UK firm by an overseas investor since the referendum result, following the £24bn swoop for chip-maker ARM by Japanese SoftBank.

Chancellor Philip Hammond said: "MasterCard’s decision to buy VocaLink shows that Britain remains an attractive destination for international investors. Britain is and continues to be an open and globally facing country in which to do business."

Barclays signals the return of the 100 per cent mortgage

9 May

Barclays caused a stir this week with the announcement it was changing the terms on one of its mortgages to allow buyers to borrow without a deposit. So, is this the return of reckless lending?

What has Barclays done?

Barclays has changed the terms of its Family Springboard Mortgage so that buyers no longer have to put down a deposit. Previously, buyers needed to be able to pay for five per cent of their new home, but now the bank will lend the entire purchase price.

Is that a bad thing?

Back in 2007, 100 per cent mortgages were one of the factors that led to the collapse of Northern Rock. They are very risky as the value of the house theoretically only needs to fall by as little as one per cent for the borrower to owe Barclays more than its value.

From a structural perspective, this is potentially problematic for a lender if there is a crash in the market as the value of their mortgage book would plummet. It could even hit liquidity in a more fundamental way if this also came alongside a wider economic downturn increasing the rate of mortgage defaults.

In addition, there are problems for borrowers who might get caught in a negative equity trap. "Having little or negative equity is a problem in that it makes it difficult to find a new mortgage deal," says Richard Dyson in the Daily Telegraph. "That leaves you trapped with your existing lender – and having to pay whatever rate it applies.

"Anyone who takes out this deal is betting on future house price rises and interest rates," he adds. "If the market stalls or falls, you could struggle to get a mortgage in future – and that leaves you prey to the variable rate that Barclays chooses to charge in the future. The worst outcome would be a fall in house prices and a rise in interest rates."

So, 100 per cent mortgages are back?

Yes and no. "This is not true 100 per cent lending and not the same as that which was symptomatic of loosening lending standards in 2007," says David Hollingworth, a mortgage broker at London & Country Mortgages.

That's because, while the buyer has to put forward no deposit with Barclay's Family Springboard Mortgage, a relative or guardian has to place ten per cent of the value of the home in a linked savings account. The money earns interest and is returned after three years.

"Many first-time buyers rely on help from parents to pull a deposit together. This product offers an option for them to take a mortgage in their own name without parents having to give them a lump sum of cash," says Hollingworth.

Barclays isn't the only lender offering 100 per cent mortgages on similar terms. Six lenders are doing so, but they all require familial help.

"Challenger bank Aldermore launched a 100 per cent loan in 2011 and several small building societies have followed," says Hilary Osborne in The Guardian. "But we are nowhere near the market seen in the runup to the credit crisis."

Is reckless lending returning?

Some experts believe Barclay's move could start us back down the path of reckless lending that led to the collapse of Northern Rock.

Although Barclays isn't quite offering a 100 per cent mortgage in the same way banks did ten years ago, other lenders will start doing so, say experts. "They will have to because they are competing with one another in a tough market," Henry Pryor, a buying agent and housing market commentator, tells The Independent.

So nothing has changed?

Yes, it has. Getting a 100 mortgage will be nowhere near as easy now as it was in 2007, after regulators introduced new rules to prevent a return to risky practices that might precipitate a future financial crisis.

"To be accepted for one of today's 100 per cent mortgages you will need to jump through more hoops than in the run up to the financial crisis," says the Guardian's Osborne.

"The Mortgage Market Review brought in new affordability tests for borrowers, with lenders examining outgoings as well as incomes and checking that monthly repayments could be afforded even at a higher interest rate."