Former Barclays bosses hid 322 million pounds in Qatar fees in 2008, court told

Banking&Finance reporter(wp/reuters):::
Four former Barclays (BARC.L) executives conspired to commit fraud by hiding 322 million pounds of payments to Qatar in return for cash injections in 2008, a prosecutor alleged at the opening of one of London’s most high-profile criminal trials.

Former chief executive John Varley and three former directors are the most senior bankers to be prosecuted in Britain over events during the financial crisis, when Barclays avoided a state bailout by raising more than 11 billion pounds from mainly Gulf investors in two cash calls.

Opening the case for the Serious Fraud Office prosecutor, senior lawyer Edward Brown alleged that the bank’s Advisory Service Agreements (ASAs), through which Qatar was paid 322 million pounds ($419.66 million) in 2008, were a “dishonest mechanism” to conceal extra fees from other investors and the wider market.

“It is the hiding of these additional commission fees which lies at the heart of this case...,” he told the jury at London’s Southwark Crown Court in a courtroom so packed that reporters had to request tickets to gain entry.

“(The ASAs) were devised by the conspirators as mechanism for paying the Qataris greater fees than those paid to other investors so as not to reveal the true position ...,” Brown told the court in a trial scheduled to last up to six months.

Varley, 62, in an open-necked shirt and jumper, listened in the glass-surrounded dock, flanked by Roger Jenkins, in a polo neck jumper and jacket, Tom Kalaris and Richard Boath, both wearing suits.

They are charged with conspiracy to commit fraud by false representation. Varley and Jenkins face two counts and Kalaris and Boath face one. They all deny the charges.

Varley and Jenkins, the 63-year-old former head of Barclays’ Middle Eastern arm, are charged with two counts of conspiring dishonestly with former finance director Christopher Lucas to make misleading or untrue representations in documents published in relation to both the June and October capital raisings.

Kalaris, 63, who ran Barclays’ wealth management business, and Boath, a 60-year-old former head of the corporate finance division, face one count over the June 2008 cash call. Both charges allege the men were either seeking to profit or to cause or expose others to losses.

Lucas, who is suffering from ill-health, has not been charged.

The case hinges on what the bank disclosed in its public statements in 2008; the prospectuses for the capital raisings and subscription agreement documents published that June and October, which outlined fees and commissions paid to investors in return for backing the bank.

Prosecutors allege that Barclays thought it essential to secure a deal with Qatar in early 2008 as markets roiled, but that the Gulf state drove a hard bargain.

Qatar initially demanded a fee of 3.75 percent before settling on 3.25 percent in return for investing in the bank - more than double what Barclays was paying other investors, the prosecution alleged.

Unwilling to risk other investors demanding the same terms - or appearing financially unstable by being seen to pay too high a price - the executives played a part in false representations to the market, the prosecution alleged.

Brown said some defendants relied on the fact that lawyers had sanctioned the use of ASAs by signing off on them, as their defense in the case. But he alleged lawyers were told the ASAs were genuinely designed to represent services provided by Qatar and that they were separate from the Qatari investment in Barclays.

“The truth is that the lawyers did not approve of the use of the ASAs as mechanisms to hide the commission fees paid to the Qataris,” he said.

Qatar, which has not been accused of wrongdoing, plowed around 4.0 billion pounds into Barclays in 2008, Brown said.

The trial continues this week.

($1 = 0.7673 pounds)

Optimism in UK factories sours as Brexit, global economy take toll - CBI

Business reporter(wp/reuters):::

Optimism in British factories faded badly over the last three months, especially around the outlook for exports in a slowing global economy and ahead of Brexit, an industry survey showed on Wednesday.

The Confederation of British Industry’s (CBI) quarterly gauge of manufacturing expectations fell to -23 in the three months to January from -16 in the period to October, its lowest level since July 2016.

The survey adds to signs of fading business confidence ahead of Britain’s scheduled departure from the European Union on March 29.

There is still no agreement in London on how and even whether it should leave the world’s biggest trading bloc, and there is a growing chance of a “no-deal” exit with no provisions to soften the economic shock.

British manufacturers’ optimism around exports for the year ahead fell to the lowest level since January 2009, during the depths of the last recession, the CBI said.

“The manufacturing sector is clearly feeling the pinch of Brexit uncertainty, with worsening business sentiment coinciding with an ongoing reluctance to invest in new facilities, machinery, innovation and training,” CBI head of economic intelligence Anna Leach said.

The CBI’s monthly gauge of industrial orders fell to -1 in January from +8 in December. A Reuters poll of economists had pointed to a reading of +5.

Santander plans to axe a fifth of its UK branch network

Business reporter(wp/reuters):::
Santander on Wednesday announced plans to shut almost a fifth of its branch network in Britain, expected to result in around 840 job losses.

The Madrid-based bank’s UK business said it would close 140 branches across the country, leaving it with 614.

The closure program will lead to around 840 redundancies, with the bank expecting to be able to redeploy only a third of the 1,270 staff affected.

Santander said it had consulted with trade unions on the proposed changes and would try to find alternative roles for staff where possible.

Santander’s action marks the latest round of major branch closures by British high street banks.

Britain has lost nearly two-thirds of its bank and building society branches over the past 30 years, according to research by consumer campaign group Which? published in November. The number of branches at that time stood at 7,586, down from 20,583 in 1988.

Santander said it was making the changes in response to the rapid uptake of digital banking. It said the number of transactions carried out in branches had fallen by 23 percent over the past three years.

It will invest 55 million pounds in refurbishing around 100 of the remaining branches.

Linda Rolph, general secretary of the Advance union, which represents Santander workers, told Reuters: “It is a sad day for the branch staff affected. We will do everything we can to find jobs for people who want them.”

Rolph said the union was not resisting the changes: “Santander was one of the last to move to cut branches. We’re not opposing because the rationale is clear. Staff thought it was a matter of time before some branches closed.”

Susan Allen, head of retail and business banking, said: “The way our customers are choosing to bank with us has changed dramatically in recent years, with more and more customers using online and mobile channels.

“As a result, we have had to take some very difficult decisions over our less visited branches, and those where we have other branches in close proximity.”

Momentum gathers behind British MPs' bid to stop no-deal Brexit

Political reporter(wp/reuters):::
An attempt by British lawmakers to prevent a no-deal Brexit was gaining momentum on Wednesday after the opposition Labour Party said it was highly likely to throw its parliamentary weight behind the bid.

The United Kingdom, facing the deepest political crisis since World War Two, is due to leave the European Union at 2300 GMT on March 29 but has no approved deal on how the divorce will take place.

Prime Minister Theresa May is battling to break the deadlock after last week’s crushing defeat of her two-year attempt to forge an orderly divorce raised the prospect of an exit without a deal.

In a step that could overturn centuries of constitutional convention, some MPs are trying to grab control of Brexit from the government in an attempt to prevent what they say would be an economically disastrous no-deal departure.

Labour is likely to back one such attempt, an amendment proposed by Labour lawmaker Yvette Cooper that could result in May being given until Feb. 26 to get a deal approved by parliament or face MPs voting on delaying Brexit.

John McDonnell, the second most powerful figure in the party, told the BBC the amendment was sensible and that Labour was “highly likely” to back it. At least nine Conservative MPs have also publicly said they will support it, suggesting that it has a good chance of passing.

Sterling strengthened 0.5 percent against the dollar GBP=D3 to $1.3024, the highest level since mid-November, on a view that a no-deal Brexit can be avoided if parliament exerts greater control over the process.

As the United Kingdom’s tortuous two-and-a-half year crisis over EU membership approaches its finale, the possible outcomes for the world’s fifth largest economy still include a no-deal Brexit, a last-minute deal, a delay or a snap election.

LONDON CALLING?

But the EU, whose members are also worried by the prospect of a disorderly Brexit that would cost jobs in major economies such as Germany, cautioned that no-deal was still the default scenario until London proposed something else.

“Preparing for a no-deal scenario is more important now than ever, even though I still hope that we can avoid this scenario,” EU Brexit negotiator Michel Barnier told a gathering of employers and labour organisations in Brussels.

“Opposing no-deal will not stop no-deal from happening,” he said, adding it would be necessary for the British to find a majority in favour of another solution to a disorderly exit.

Europe’s most powerful leader, German Chancellor Angela Merkel, said she wanted an orderly Brexit but that it was in London’s hands.

May has said thwarting Brexit would threaten social cohesion because it would undermine faith in British democracy, while police have said the “febrile” atmosphere could be exploited by far-right extremists.

Another alternative is that May gets enough concessions from the EU to win over rebels in her Conservative Party as well as the Northern Irish party that props up her minority government.

Some have indicated they could be won over if May manages to secure concessions on the so-called Northern Irish backstop, an insurance policy to keep the border open between the British province and Ireland if a future trade deal falls short.

DELAYED BREXIT

Parliament will vote on Jan. 29 on different options put forward by MPs, potentially opening a way out of the stalemate.

A Labour spokesman said the party would “look at all mechanisms to take no deal off the table and to give parliament more of a say in this process” and that leader Jeremy Corbyn was meeting Cooper on Wednesday to discuss the amendment.

If the Cooper amendment is passed, it would effectively give parliament the power to set May a deadline of Feb. 26 to get a deal through parliament.

If May fails, parliament would be given a vote on asking the EU for a postponement of the Article 50 deadline to prevent Britain leaving without a deal on March 29. It proposes a nine-month extension, to Dec. 31.

May told parliament the move would not solve the issue of the impasse in parliament over the way forward.

“What we have seen is amendments seeking to engineer a situation where Article 50 is extended - that does not solve the issue, there will always be a point of decision. The decision remains the same: no deal, a deal or no Brexit,” she said.