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LONDON (Reuters Breakingviews) - Britain's graft watchdog is serving up some lukewarm justice. The Serious Fraud Office has charged Barclays and four former employees in connection with the £11.5 billion of capital it raised in 2008 from investors including the Qatari government. The charges of false representation and unlawful financial assistance are the first to have been brought against a major UK bank and its former bosses. In the intervening decade Barclays – and the world – have moved on.
The British lender and its former employees, including ex-chief executive John Varley and former senior bankers Roger Jenkins, Thomas Kalaris and Richard Boath, will now present their case, starting with a hearing on July 3. Individuals could face prison if found guilty. Barclays itself could end up with fines along the lines of those that retailer Tesco and engine maker Rolls-Royce agreed with the SFO earlier this year.
The stain on the bank’s history apart, the main impact on Barclays is the potential financial cost, and a drain on current Chief Executive Jes Staley’s time. Aside from any fines that may result from the SFO’s action, the lender faces potential civil cases including a $1 billion suit from financier Amanda Staveley, and an unfair dismissal case from Boath. The U.S. Securities and Exchange Commission and Department of Justice, and Britain’s Financial Conduct Authority, are also still investigating.
Though it’s important that justice is seen to be done, authorities are edging towards answering questions nobody is asking anymore. Barclays has had three chief executives since Varley, and has conducted a wide-ranging review of its culture. Investors and regulators probably fret more about present risks, like whether Barclays can pass U.S. stress tests, or how to field Staley’s clumsy misfires, such as his attempt to unmask a whistleblower.
The verdict also won’t change the fact that Barclays has benefited from avoiding an injection of UK government capital in 2008. Since then, the bank’s shares have delivered investors a total return of more than 70 percent, compared with around 20 percent for the part-nationalised Lloyds Banking Group and heavy losses for investors in Royal Bank of Scotland, which still labours under state control. The SFO may be closing a chapter in financial history, but investors are already onto the next volume.
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