Bar­clays Saudi probe adds to CEO Jenk­ins’s reg­u­la­tory woes

The Pak Banker - - Front Page -


Bar­clays Plc Chief Ex­ec­u­tive Of­fi­cer Antony Jenk­ins, al­most two years af­ter his pre­de­ces­sor said it was time for banks to stop apol­o­giz­ing, is still grap­pling with a mul­ti­ply­ing num­ber of probes by reg­u­la­tors.

The US Depart­ment of Jus­tice is in­ves­ti­gat­ing whether the lender made pay­ments that vi­o­lated the For­eign Cor­rupt Prac­tices Act to win a bank­ing li­cense for its wealth-man­age­ment unit and in­vest­ment bank in Saudi Ara­bia, the Fi­nan­cial Times re­ported on Nov. 9, cit­ing uniden­ti­fied peo­ple fa­mil­iar with the talks. The bank is al­ready be­ing probed by the Se­ri­ous Fraud Of­fice over fees it paid in 2009 to Qatar’s sov­er­eign-wealth fund as the lender sought money to avoid a gov­ern­ment bailout.

For Jenk­ins, who re­placed Robert Di­a­mond af­ter the lender paid a record fine for ma­nip­u­lat­ing Li­bor, the probes are likely to be a big­ger set­back to his ef­forts to show politi­cians the bank can put reg­u­la­tory mis­steps be­hind it than the size of any fines, ac­cord­ing to an­a­lysts. He may have to in­clude stiffer in­ter­nal con­trols to de­tect staff who break laws in pur­suit of rev­enue when he an­nounces the re­sults of his re­view of Bar­clays’s op­er­a­tions in Fe­bru­ary, said Christo­pher Wheeler, a Lon­don-based bank­ing an­a­lyst at Me­diobanca SpA.

“Jenk­ins has to continue to bat­ten down the hatches, say these is­sues came out of the pre-cri­sis pe­riod and say he can cre­ate an at­mos­phere where it doesn’t hap­pen again,” said Wheeler, who rates the shares an out­per­form. “The more that comes out, the more he can wave the big stick in Fe­bru­ary.” In Jan­uary 2011, Di­a­mond told a panel of British law­mak­ers that the time for “re­morse and apol­ogy” for banks needed to be over. Since then, the lender has paid a record 290 mil­lion-pound ($461 mil­lion) fine af­ter reg­u­la­tors found its in­vest­ment bankers tried to ma­nip­u­late the Lon­don in­ter­bank of­fered rate.

The con­sumer bank, which Jenk­ins, 51, pre­vi­ously ran, has also been hob­bled by com­pen­sa­tion claims from Bri­tons wrongly sold so-called pay­ment-pro­tec­tion in­sur­ance they didn’t re­quire or lost them money. The lender last month set aside an ad­di­tional 700 mil­lion pounds to cover the costs of re­dress, bring­ing the to­tal to 2 bil­lion pounds, sec­ond only to Lloyds Bank­ing Group Plc (LLOY), the coun­try’s big­gest mort­gage lender.

US reg­u­la­tors this month also pro­posed levy­ing a record $470 mil­lion in penal­ties on Bar­clays af­ter it al­legedly gamed en­ergy mar­kets in the Western U.S. from late 2006 to 2008.

John McGuin­ness, a Bar­clays spokesman, and the Depart­ment of Jus­tice’s Re­bekah Carmichael de­clined to com­ment on the Saudi probe. The Saudi Ara­bian cap­i­tal mar­kets reg­u­la­tor, known as the CMA, said it is “not aware of any in­ves­ti­ga­tion” into Bar­clays and hasn’t re­ceived any in­quiries from reg­u­la­tors on the mat­ter.

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