Barclays is fined twice in one day
Penalties hit bank’s rehabilitation efforts
BARCLAYS was fined twice in one day for client account failures in the UK and the US, hurting its effort to rehabilitate a tarnished image. It agreed to pay a total of $77m in penalties.
The bank will pay $15m to the Securities and Exchange Commission to settle claims that its US wealth-management business failed to maintain an adequate internal compliance system and made trades and charged commissions without client approval.
In the UK, also on Tuesday, Barclays agreed to pay £38m to Britain’s market regulator for failing to properly protect £16.5bn of client assets between 2007 and 2012. Flaws in account naming or data suggested assets belonged to Barclays instead of its clients, which could have caused customers to lose money if the bank became insolvent, the Financial Conduct Authority (FCA) said.
“We have no doubt that Barclays is striving to enhance compliance and creating a culture that avoids these kinds of issues,” said Christopher Wheeler, an analyst at Mediobanca who has a neutral rating on Barclays shares. “This will come with a cost.
“In the meantime, the bank has to continue to suffer the reputational damage these fines cause.”
CEO Antony Jenkins, 53, has been trying to restore investor and regulator confidence in the lender since he took over as CEO
in 2012. A Libor rate-rigging scandal cost the bank £290m in fines and triggered the ouster of Robert Diamond, Jenkins’ predecessor.
It is proving difficult. The lender was fined £26m in May by the FCA for control failings over its setting of gold prices. In the US the bank is fighting New York Attorney-General Eric Schneiderman’s allegations that it misled customers of its privatetrading venue, or dark pool.
Chirantan Barua, an analyst at Sanford C Bernstein, estimated the lender may have to pay £900m this year to settle probes into alleged manipulation of currency markets and into its dark pool. Barclays has set aside more than £1.6bn to compensate customers who were sold insurance they didn’t need or interest-rate swaps that lost them money.
“Legacy issues still have a significant impact on our business,” Mr Jenkins said on June 30.
“We are working to resolve them as quickly as possible.”
In the SEC case Barclays made more than 1,500 transactions for client accounts without providing required written disclosures or getting consent, the regulator said. It also earned revenue and charged commissions that didn’t match disclosures for 2,785 clients, the agency said.