Barclays and four ex-bankers charged with 2008 fraud

Barclays profits slump as investment arm struggles

30 March

Barclays has recorded a 25 per cent drop in profits for the first quarter of the year, due mainly to weak performance by its investment division, which has struggled to make deals during a time of global market volatility and worries over growth.

Pre-tax profit for the first three months of 2016 was £739m, down from the £1.1bn for the same quarter of 2015. As a result, the 2016 dividend to investors will be 50 per cent lower.

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The slump certainly does not come as a surprise, given the rocky financial waters worldwide at the start of the year. Analysts had expected a profit of £846m.

Barclays may have underperformed that prediction to the tune of £100m, but these latest results are "robust" and have pleased investors, says the Financial Times.

In particular, the bank did better than US rivals on some measures. Its investment arm suffered a 31 per cent fall in underlying pre-tax earnings but only lost four per cent of market revenue, a much better performance than the falls of 20 per cent reported by big US banks.

Investor confidence was reflected in the bank's share price, which rose more than four per cent in the opening minutes of trading before slipping back slightly. They are up almost a fifth in the last month, says the FT.

Analysts at Jefferies wrote in a note to clients: "The overall message is that the new CEO is executing well on plans."

Barclays' chief executive Jes Staley said: "The dividend cut is painful but I think there's a recognition of the benefits of getting non-core closed and putting the restructuring of Barclays behind us."

Barclays announced yesterday that it has agreed the sale of its French retail, investment and wealth management business. It has already announced it is selling other overseas divisions, including its African bank.

"Accelerating the disposal of our non-core unit is the key to creating a simpler, more focused Barclays, and to eliminating the drag on the performance of our strong core business," said Staley.

'Scapegoat' Wafic Said sues Barclays over severed ties

30 March

Syrian-born billionaire Wafic Said is suing Barclays after it unexpectedly severed ties with him, following a 40-year client relationship.

The 76-year-old businessman and philanthropist, whose personal fortune is estimated at £1.5bn, filed proceedings at the High Court last week.

Using the Data Protection Act, the Monaco resident and Conservative Party donor hopes to force Barclays to disclose any information that influenced its decision to call time on its relationship with him.

The bank told Said in December that it no longer wanted him or his charity, The Said Foundation, as clients.

The Guardian says the businessman, who fled a military coup in Syria in 1963, believes Barclays is using him as a scapegoat in order to improve its reputation.

His spokesman said: "Mr Said said he was not prepared to be treated in this cavalier manner by a bank he had worked with for more than 40 years."

Lenders have become increasingly risk-averse following several high-profile fines by authorities over breaches of sanctions and anti-money laundering rules, says the Financial Times.

Clients with links to developing nations or those in volatile regions are falling victim to a "de-risking" strategy. Barclays is particularly jittery after it was hit with a £72m fine by the UK regulator for breaching anti-money laundering rules in November.

Said's lawsuit is the second high-profile legal action the bank has faced this year. It was sued in January for £1bn, including interest, by PCP Capital over arrangements made with Qatar as part of an emergency cash call at the height of the economic crisis.

A Barclays spokesman said the bank "would never comment on ongoing litigation or individual customers".

Barclays investors demand talks over slashed dividends

09 March

Barclays investors are not taking the news that their dividends are to be slashed over the coming two years lying down.

Several major shareholders are to demand a meeting with Sir Gerry Grimstone, who took over from Sir Mike Rake as the bank's deputy chairman less than ten weeks ago, according to Sky News. The businessman will be quizzed on apparently contradictory message from chairman John McFarlane last autumn.

In its results last month, the bank revealed it was halving investor payout over the next two years and undertaking a radical restructuring, which includes selling its African subsidiary. The plans will set the group up for new retail ring-fencing rules in the UK and it is hoped the rationalised business will finally be able to rein in comparatively high running costs and return to sustainable growth.

However, shareholders are not happy at what they see as another example of investors paying the price for broader failings.

"Yet again, they are asking shareholders to take all the pain," said one.

Says Sky News: "Barclays has had a protracted history of disputes with investors, many of which have centred on the relative capital distributions between employees and investors."

For 2015, the bank awarded £1.7bn in bonuses and paid a little more than £1bn to shareholders in dividends. Shares fell as much as 11 per cent in the aftermath of the results and are down to just 172p today, a fall of around 40 per cent since a peak above 290p last summer.

Sky adds that "board members are expected to face pressure to demonstrate further restraint on pay for the next two years given last week's dividend announcement". This might be an area on which they will find common ground with Sir Gerry, who yesterday seemed to support even greater limitations on bankers' bonuses.

He told The Guardian he wanted to move "to a system where a large part of variable remuneration are shares that you hold in the organisation for five years or ten years". Under new rules, bankers' bonuses must be deferred for up to seven years.

Barclays could pay millions more to draw line under past wrongdoing

07 March

Barclays chief executive Jes Staley is keen to wipe the slate clean and rebuild his bank's reputation - and he is apparently willing to pay to make it happen.

The Daily Telegraph reports that the bank's new boss, who took over just three months ago, is "planning to power through the mounting pile of regulatory investigations the bank is facing". It is "expected to see him risk taking bigger fines, in exchange for quicker deals with the authorities".

Early settlements with the Financial Conduct Authority attract a typical 30 per cent discount, while other regulators are often willing to reduce the level of fines or drop criminal charges if banks cooperate rather than fighting punitive actions.

On the other hand, as the fallout from the financial crisis has shown, it can be difficult for authorities to make cases stick and Barclays and others have fought charges over extended periods, lessening the eventual penalty.

But Staley knows this comes at a cost. Past wrongdoing has hung like a spectre over the bank for a number of years and frequent negative surprises in terms of new investigations, increased compensation or bigger fines have weighed on its shares.

Barclays stock has fallen around 40 per cent from a peak last summer close to 290p per share to 172.7p this afternoon. It is down 23.5 per cent in the past three months and more than 20 per cent since the turn of the year.

When he took over the bank in December, Staley said he wanted a more "collaborative" relationship with regulators.

"I have repeatedly said that banks should spend less time preparing for a scenario similar to 2008 and more time working to avoid such situations entirely. Core to that objective is having relationships with regulators that are… not adversarial,” he said.

Last week, Barclays revealed it had slipped to a fourth quarter loss that pushed it into the red for 2015 as a whole. Over the 12 months it added another £3.4bn to provisions for past failings, including £2.2bn for mis-selling of payment protection insurance.

Barclays chairman hits back over 'excessive' fines

02 March

There is a general consensus among the public that banks and bankers have been let off lightly for their reckless profiteering in previous years.

Not so, says Barclays chairman John McFarlane. Instead, he believes his bank has been singled out - and bemoaned the "societal cost of excessive penalties".

"A £50m fine or penalty is the equivalent of employing 1,000 fewer employees, closing 100 small regional branches, or forgoing the capacity to lend over £500m to small businesses or consumers," McFarlane wrote in the bank’s annual report, according to The Guardian.

"The charges are not proportionate to our smaller size and ability to pay relative to many of our peers," he added.

In its annual results last week, Barclays revealed net losses widened in 2015 in part because of a huge additional provision through the year for past wrongdoing. It racked up £4bn of charges for the 12 months as a whole, covering fines and compensation for issues ranging from the mis-selling of payment protection insurance to the rigging of international interest rates.

The problems won't end there because the bank cited a whole spate of issues that could yet yield further sizeable penalties.

These include proves into the way it sold structured deposit products to UK customers, hiring practices in Asia, activities in its US wealth management business and allegations of fraud in its South African unit. It is also being sued by a high profile financier over its own actions at the time of a big capital rising in the financial crisis of 2008.

But MPs rejected - and even, in the words of the Daily Mail, "ridiculed" - any suggestion Barclays was hard done by.

"Barclays only has itself to blame. These fines are there to drive better behaviour. Stop screwing up and you won’t get fined," said Mark Garnier, a Conservative member of the Commons Treasury committee.

Fellow party and committee member, Jacob Rees-Mogg, meanwhile, compared McFarlane's comments to those made by former Barclays chief Bob Diamond in 2011 that the time for "remorse" was over.