UK authorities examining Barclays Qatar loan in 2008

Yet another blow to the British investment bank’s image.

New Statesman
Photograph: Getty Images.

The authorities in the UK are investigating on an allegation related to Barclays investment of loan money received from Qatar in the bank during the 2008 financial crisis and in turn avoided a bailout from the British government.

The British investment bank secured a loan of £6.1bn in 2008 from Qatar Holding, a subsidiary of the Qatar Investment Authority, and Challenger, an investment vehicle of the prime minister of Qatar and his family.

The allegations, if found true, will be breach of market regulations, warn legal experts.

Peter Hahn, a former Citi banker and currently working at Cass Business School told the Financial Times: “The concept of lending money to any investor to purchase your own shares raises a series of immediate questions about disclosure and other regulatory issues.

On the other hand, the Financial Services Authority (FSA) and the Serious Fraud Office (SFO) are examining the terms of Barclays’ emergency fundraising primarily focusing on fees paid for the deal.

In the recent times, the Libor scandal and the mis-selling of payment protection insurance have affected the bank’s image.

In June 2008, Barclays invested a total of £4.5bn in operations that was secured from Qatar Holding, Challenger and other sovereign wealth funds including Temasek of Singapore. Following this, the bank received a loan of £7.3bn from Qatar Holding and Challenger investing with Abu Dhabi.

In June 2008, Barclays said it had signed an arrangement under which the Qatar Investment Authority (QIA) would advise Barclays in the Middle East. Then in October 2008, the bank said that Qatar Holding would receive £66m for “having arranged certain of the subscriptions in the capital raising”.

In its interim results in July 2012, the bank said that four of its former and current executives along with CFO Chris Lucas were involved in the FSA investigation. John Varley, the bank’s former CEO, Richard Boath, its current co-head of global finance in Europe, the Middle East and Africa, and Roger Jenkins, the former head of Barclays’ tax advisory business, were the others.