Tags: barclays | web search | risk | elephant

Barclays Chose Web Search Over Risk Check on 'Elephant' Deal

Friday, 27 Nov 2015 10:31 AM

Barclays Plc bankers who manage money for the ultra-rich were supposed to have been even more vigilant than usual as they considered a multi-billion-dollar deal for people with high-profile political ties in 2011.

Instead, officials at the London-based lender “relied on printouts from publicly available Internet pages” while failing to seek out the source of the clients’ wealth, as required under anti-money laundering rules, the U.K. Financial Conduct Authority said as it fined Barclays a record 72.1 million pounds ($109 million). The FCA didn’t disclose the names of the individuals involved.

The FCA fine is “yet another dark day not only for the bank, but for the U.K.’s banking sector,” said Nicholas Ryder, a professor in financial crime at the University of the West of England. “The alleged conduct from the bank shows a complete lack of compliance from within the institution and even a disregard for even the basic of requirements.”

Diamond, Jenkins

Since joining Barclays in April, Chairman John McFarlane has pledged to restore a “high performance ethic” at Britain’s second-largest bank, hurt by a series of scandals. In Jes Staley, the bank last month named its third chief executive officer in three years after Robert Diamond resigned in 2012 following a fine tied to Libor rigging, while Antony Jenkins was fired in July over the perceived slow pace of restructuring at the investment bank.

At the wealth division, run by Tom Kalaris at the time, bankers working to close the 1.9 billion-pound “elephant deal,” kept details of the transaction in a safe. That arrangement meant that Barclays was unable to respond “promptly” to a request for information regarding the clients, with only a few people aware of the “existence and location of the safe,” the FCA said. Instead, the bank had to “conduct manual searches for other information” linked to the individuals, it said.

The FCA made no finding the bank facilitated any financial crime in relation to the transaction. The Financial Times reported that the Barclays clients were from Qatar, citing undisclosed people familiar with the probe. A spokesman for Barclays in London declined to comment.

Elephant Deal

Barclays should have imposed “enhanced levels of due diligence monitoring” as it executed the transaction, dubbed an elephant deal because of its size, the FCA said. The lender didn’t follow standard procedures, “preferring instead to take on the clients as quickly as possible,” it said.

“While there is nothing inherently wrong with keeping documents in hard copy, they must be easily identifiable and retrievable,” the FCA said of the bankers’ decision to use the safe.

In the early stages of the transaction, which generated 52.3 million pounds in revenue, one executive said it could be “the deal of the century” for Barclays. The structured-finance transaction consisted of investments in notes backed by underlying warrants and third party bonds, the FCA said.

The clients requested that Barclays make a payment of several tens of millions of U.S. dollars to a third party at one stage during the transaction. The request was withdrawn after Barclays questioned the reason for that payment, according to the FCA.

Barclays said Thursday that it “cooperated fully with the FCA throughout and continues to apply significant resources and training to ensure compliance with all legal and regulatory requirements.”

Barclays shares have dropped about 7.8 percent this year.

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
Companies
Barclays Plc bankers who manage money for the ultra-rich were supposed to have been even more vigilant than usual as they considered a multi-billion-dollar deal for people with high-profile political ties in 2011.Instead, officials at the London-based lender "relied on...
barclays, web search, risk, elephant
552
2015-31-27
Friday, 27 Nov 2015 10:31 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved