Charges being made against Barclays Bank over fraud allegations

The Serious Fraud Agency (SFO) has announced that it will be pressing charges against Barclays Bank over allegations of fraud. The allegations were initially made during the financial crisis, and the bank’s parent company, Barclays PLC, has already faced similar charges in relation to capital raising processes that took place in 2008.

So, what are the allegations? The bank is being charged over the possible fraudulent activity that was carried out when the bank made loans to the company Qatar. In 2008, Barclays admitted that it accepted a £12 billion loan from Qatar Holdings – a state owned Investment Company. The bank then loaned Qatar £3 billion.

It’s believed that the money it accepted saved Barclays from needing a government bailout similar to other banks in the UK. However, if the SFO can prove that the loan was directly linked to the Qatari payment then the bank may have broken the law as UK companies are not allowed to lend money that’s later used to buy shares in their own company.

Charges were made in 2017 against Barclays PLC, but not against the bank itself. The SFO has since confirmed that it will be charging Barclays with the same offence. Although a court date is yet to be set, there are serious concerns being raised over the bank’s ability to operate in the UK in the future.

In theory, if Barclay’s is found guilty of fraud and the courts find that they’ve broken the law, they have the right to remove their banking licenses. Whilst it seems an unlikely outcome at this stage, the impact of it losing its license would e catastrophic, not only for the banking industry but for the entire economy. Considering the impact it would have, Barclays would be unlikely to let it happen without a serious fight.

Both Barclays PLC and Barclays Banks have both confirmed that they intend to defend themselves against all the allegations being made against them. “Barclays does not expect there to be an impact on its ability to serve its customers and clients as a consequence of the charge having been brought,” the group said.

Considering the size of the bank, and the fact other banks haven’t had their licenses removed over fraud allegations, there seems to be little reason to worry at this stage. Shares in Barclays PLC have also remained steady, which indicates that shareholders are confident that the bank will recover after the charges.