Howard Mustoe London
BARCLAYS chief executive Antony Jenkins is still grappling with a multiplying number of probes by regulators, almost two years after his predecessor said it was time for banks to stop apologising.
The US Department of Justice was investigating whether the bank made payments that violated the Foreign Corrupt Practices Act to win a banking licence for its wealth management unit and investment bank in Saudi Arabia, the Financial Times reported on Friday.
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 bank sought money to avoid a government bailout.
For Jenkins, who replaced Robert Diamond after the lender paid a record fine for manipulating the London interbank offered rate (Libor), the probes were likely to be a bigger setback to his efforts to show politicians the bank could put regulatory missteps behind it than the size of any fines, analysts said.
He might have to include stiffer internal controls to detect staff who broke laws in pursuit of revenue when he announced the results of his review of Barclays’s operations in February, Mediobanca banking analyst Christopher Wheeler said.
“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,” Wheeler said. “The more that comes out, the more he can wave the big stick in February.”
In January last year, Diamond told a panel of British legislators that the time for “remorse and apology” for banks needed to be over. Since then, the bank has paid a record £290 million (R4 billion) fine after regulators found its investment bankers tried to manipulate the Libor.
The consumer bank, which Jenkins previously ran, has also been hobbled by compensation claims from Britons wrongly sold payment-protection insurance that they did not require or lost them money. The bank last month set aside an additional £700m to cover the costs of redress, bringing the total to £2bn, second only to Lloyds Banking Group.
US regulators this month proposed levying a record $470m in penalties on Barclays after it allegedly gamed energy markets in the western US from late 2006 to 2008.
Barclays spokesman John McGuinness and the Department of Justice’s Rebekah Carmichael declined to comment on the Saudi probe.
The Saudi Arabian capital markets regulator said it was “not aware of any investigation” into Barclays and had not received any inquiries from regulators on the matter.
The shares have advanced 30 percent this year, the third-biggest increase among British banks after Lloyds and Royal Bank of Scotland.
Barclays received a licence from Saudi Arabia’s market authority to operate in the kingdom in August 2009. The London-based bank sought to expand its wealth management operation in the region as the country’s oil wealth created more millionaires.
The bank said in an October 31 filing that the US Justice Department and Securities and Exchange Commission were probing whether or not its relationships with unidentified third parties who helped the bank win business complied with the Foreign Corrupt Practices Act.
Estimating the size of any fine US authorities might impose was difficult without knowing more about the nature of the Justice Department’s investigation, Liberum Capital banking analyst Cormac Leech said yesterday.
“Manipulating the energy or Libor markets is more significant because of its scale, so I would think any penalty would be less,” he said.