February 12, 2018 / 8:26 AM / 10 months ago

UK's SFO extends Qatari loan charge to Barclays operating arm

LONDON, Feb 12 (Reuters) - Britain’s Serious Fraud Office has charged Barclays Bank with unlawful financial assistance to Qatari investors, extending to the lender’s operating arm the same charge it made against the holding company last June.

A loan paid to Qatar in November 2008 could have broken the law if the SFO can show it was connected with the Qatari payments to Barclays. Public companies are normally prohibited in the UK from lending money for the purchase of their own shares, a process known as financial assistance.

“The charges relate to financial assistance Barclays Bank Plc gave to Qatar Holding LLC between 1 October and 30 November 2008, which was in the form of a $3 billion loan for the purpose of directly or indirectly acquiring shares in Barclays Plc,” the SFO said in a statement.

“This follows charges brought against the holding company, Barclays Plc, and four individuals in June 2017.”

The SFO said a date for the first court appearance will be set in due course.

Barclays said that Barclays PLC and its operating arm Barclays Bank PLC intend to defend the respective charges brought 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.

Two former top executives also face a charge of unlawful financial assistance.

The trial of Barclays PLC and four former top executives charged with conspiracy to commit fraud by false representation when they negotiated a capital injection for the bank from Qatar, is due to start next January. That separate charge has not been made against the operating arm

Qatar, which is a major UK investor, has not been accused of wrongdoing.

Analysts at Keefe, Bruyette & Woods said that while it was unhelpful for Barclays that the SFO has added charges, it should not change the dynamics of the case materially.

“However, it is negative that the group hasn’t been able to settle a number of outstanding litigation issues, with outstanding litigation representing an unhelpful distraction to the management of the core franchise,” the financial services firm said in a note to clients. (Additional reporting by Lawrence White, editing by Kirsten Donovan)

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