Barclays

Barclays

Barclays plc is a London, UK based investment bank and financial services company with numerous interests throughout the world. The company operations function in the areas of personal banking, corporate banking, wealth management, and investment management.

Barclays was cited in a 2011 paper as the most powerful transnational corporation over global financial stability and market competition.

Barclays is listed on the London Stock Exchange and is a component of the FTSE 100 Index.

The largest shareholder of the company is Qatar Holdings, which is an investment instrument for the State of Qatar.

 

Operations

One of the two major segments of company’s operations includes three business units: Corporate banking; Investment banking; and Wealth and investment management.

The second major segment is made up of four business units: African Retail and Business Banking; Barclaycard (credit card and loan provision); European Retail and Business Banking; and UK Retail and Business Banking.

Barclays maintains more than 4,750 branches in approximately 55 countries. Branches within the UK number around 1,600, and also may be found offering limited services in branches of the Post Office. Barclays is a member of the Global ATM Alliance.

 

History

Barclays traces its origins back to 1690 when John Freame and Thomas Gould started trading as goldsmith bankers. The name “Barclays” became associated with the business in 1736, when Freame’s son-in-law James Barclay became a partner.

Several banks in 1896 merged as a bank, forming Barclays and Co. with nationwide locations and services.

Barclays lead the way to several ‘firsts’. The company introduced Barclaycard, in 1966, which was first credit card in the UK. The first cash machine in the world was implemented by the company in June 1967. Barclays launched the first debit card in the UK, the Connect card, in June 1987.

Barclays purchased the investment-banking and trading divisions of Lehman Brothers, which was a United States financial conglomerate in bankruptcy.

Barclays received US$8.5 billion in 2008 from its insurance arrangements relating to the bail-out troubled US insurance company AIG.

Barclays’ share price fell 54% in June 2009 on the news of the sale of 1.3 billion Barclays shares by the International Petroleum Investment Company (IPIC), which had invested up to £4.75 billion in November 2008.

Qatar Holding is one of the bank’s largest shareholders in spite of the sale of a 3.5% share in October 2009, and another sale of warrants in November 2012.

Barclays overtook Santander UK as Briton’s most complained about bank. The Financial Services Authority recorded 276,315 new customer complaints against Barclays Bank during the second half of 2010.

Barclays recorded a net loss of £1.04 billion for 2012. This was the first annual loss for the financial institution in two decades.

Barclays announced in 2015 that it would become the first UK bank to start accepting bitcoin. The bank plans to allow users to make charitable donations using the virtual currency.

Barclays planned to allow its UK customers to use Apple Pay according to an announcement made in April 2016.

 

Controversies

Compensation to Jewish Holocaust Survivors

Barclays agreed in 1998 to pay US$3.6m to compensate Jews from whom assets were seized by French branches of the British bank during World War II. Barclays and seven French banks were named in a lawsuit filed in New York on behalf of Jews who were unable to reclaim money they deposited during the war.

 

Government of Zimbabwe

Critics of Barclays’ funding a set of loans to help sustain land reforms that resulted in Mugabe seizing white-owned farmland and driving more than 100,000 black workers from their homes, call the bank’s involvement a ‘disgrace’ and an ‘insult’ to the millions who have suffered human rights abuses. A spokesman for the bank says that it has had customers in Zimbabwe for decades and abandoning them now would make matters worse.

 

Accusations of money laundering

Accusations were leveled in March 2009 that Barclays was in violation of international anti-money laundering laws. In a statement made by NGO Global Witness, the Paris branch of Barclays continued to hold the account containing money from siphoned oil revenues. The account belongs to the son of Equatorial Guinean President Teodoro Obiang.

The Wall Street Journal described in a 2010 article how Barclays and other banks were involved in helping the Iranian government, Alavi Foundation, Bank Melli, and others to circumvent US laws banning financial transactions with restricted states by ‘stripping’ information out of wire transfers, thereby concealing the source of the funds. Barclays settled with the US government for US$298 million.

 

Rate-fixing scandal

An international investigation resulted in Barclays Bank being fined a total of £290 million (US$450 million) in June 2012. This fine was for manipulating the daily settings of London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor). In a statement by the BBC said that the fraud was “greeted with almost universal astonishment in the banking industry.”

The biggest fine ever imposed in the history of the UK’s Financial Services Authority (FSA) was levied on Barclays, a fine of £59.5 million ($92.7 million). The director of enforcement for FSA characterized Barclays’ actions as “completely unacceptable”, adding “Libor is an incredibly important benchmark reference rate, and it is relied on for many, many hundreds of thousands of contracts all over the world.”

 

US electricity market manipulation

US Federal Energy Regulatory Commission (FERC) ordered Barclays on July 2013 to pay a £299 million fine for attempting to manipulate electricity market in the US. This action by FERC stems from allegations made in December 2008.

 

Gold price manipulation

The Financial Conduct Authority fined Barclays £26 million in May 2014. This was due to systems and controls failures, and a conflict of interest between the bank and its customers in connection with manipulation of the gold price on 28 June 2012 and during the years 2004–2013.

 

Dark pool fraud

The US state of New York filed a lawsuit against the bank In June 2014. The suit alleged that the bank defrauded investors with deceptive marketing material about its unregulated trading system known as a dark pool.

Barclays settled with both the New York Attorney General’s office and the Securities and Exchange Commission (SEC) on January 31, 2016. The agreement resulted in payment of US$70 million, split evenly between the SEC and New York State. The bank admitted it violated securities laws and agreed to install an independent monitor for the dark pool.