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Barclays hit by new Qatar allegations Barclays boss waives bonus as bank rocked by new Qatar allegations
(about 1 hour later)
Barclays is under investigation by the UK authorities following allegations that it engineered its rescue during the financial crisis with a series of suspicious loans, according to the Financial Times. Antony Jenkins, the chief executive of Barclays, will waive his 2012 bonus as the bank took another reputational hit after it emerged the bank is under investigation over its relationship with Qatar at the height of the financial crisis.
The newspaper said that the Serious Fraud Office and the main City regulator are looking at whether Barclays lent Qatar money to invest in the bank, ahead of its battle to stay independent and resist taking government cash. The Qataris were key contributors to a crucial £7.3bn lifeline to Barclays following the credit crunch which allowed the bank to avoid a taxpayer bailout.
A loan to Qatar, in effect underwriting the Middle Eastern state's later investment, would have undermined the security of that investment and been ruled out by the regulator. The Serious Fraud Office and the Financial Services Authority are looking at whether Barclays lent Qatar funds to invest in the bank, The Financial Times reported.
None of the parties involved in the investigation would comment on the news, which heaps further embarrassment on Barclays boss Anthony Jenkins at a time when he is trying to clean up the bank's image, following a run of scandals. Jenkins' decision to waive his bonus was announced shortly after the story appeared and ahead of his appearance before MPs and peers next week on the banking standards commission. The head of the bank's remuneration committee, Sir John Sunderland, appeared before the commission on Wednesday when he faced scrutiny about his plans to offer Jenkins a "seven figure" bonus for 2012.
The SFO is already reviewing the methods used by Barclays to prevent its collapse in 2008. The latest allegations are understood to be an extra line of inquiry. Jenkins was promoted to chief executive at the end of August after Bob Diamond quit in the wake of the bank's £290m fine for rigging Libor.
The FT said that Chris Lucas, the finance director, is among four executives being investigated as part of the ongoing review. Barclays would not comment on the latest twist in the investigation into the fundraising and neither would the SFO or the FSA. In July the bank had admitted that its finance director, Chris Lucas, and former directors were under investigation by the FSA about the 2008 fundraising and disclosures that were made about fees "under certain commercial agreements" in June and November that year. By August, the SFO had launched an investigation in to the payments.
Barclays, like several UK and US banks, sought funds from the Middle East at the height of the credit crunch. The latest allegations appear to be the latest strand in that inquiry and the FT said that the identity of any borrowers and size of the alleged loans are unclear.
It was understood at the time that Qatar Holding, a subsidiary of the Qatar investment Authority and another Qatari fund, had invested more than £6bn in the bank at their own risk. The allegation centres on whether Barclays backed the investment in its own shares with loans it was not in a position to make. Jenkins, who is on a potential £8.5m a year package, said: "The year just past was clearly a very difficult one for Barclays and its stakeholders, with multiple issues of our own making besetting the bank. I think it only right that I bear an appropriate degree of accountability for those matters, and I have concluded that it would be wrong for me to receive a bonus for 2012 given those circumstances."
Earlier this week the bank had faced criticism for sounding out investors about a potential bonus of at least £1m - his maximum entitlement is 2.5 times his £1.1m salary - given the Libor fine and the cost of the payment protection insurance misselling scandal which has now reached £2bn for Barclays. The bank may also need to set aside more to compensate customers missold interest rate swaps.
"I am aware of considerable speculation about, and public interest in, the question of whether I will be awarded a bonus in respect of my performance in 2012," he said.
"To avoid further unnecessary public debate on this matter, I wish to make clear that I concluded early this week that I do not wish to be considered for a bonus award for 2012, and I have communicated that decision to the board," Jenkins said.
The new chief executive does not appear to have told the board before the appearance at the banking commission by Sunderland on Wednesday. Sunderland would only describe the possibility of a £1m bonus as speculation and stunned members of commission by saying he would still have handed Diamond a bonus for 2011 in spite of the Libor fine.
Stephen Hester, the boss of Royal Bank of Scotland, has already waived his 2012 bonus but it is not yet clear what will happen for his counterpart at bailed out bank Lloyds Banking Group, António Horta-Osório. Nor is it known whether the bosses of HSBC and Standard Chartered, both of which were hit by large penalties by US regulators last year, will be awarded or accept bonuses.