Hmm, so, did they?

New questions are emerging over Barclays’ rescue fundraising in 2008 as the Serious Fraud Office and the Financial Conduct Authority extend their inquiries into the deal.

Court documents filed in a civil case related to the £7.3bn injection from Middle Eastern investors have drawn attention to a separate transaction at around the same time.

Barclays lent £2bn to Qatar just weeks after the announcement of the role played by the Gulf state’s principal investment vehicle in the bank bailout. The debt component of Qatar Holding’s investment was for the same sum of £2bn.

Was that money just round tripped? Be fascinating to know…..

The point being that the bank needed capital. It had pots and pots of dosh, of deposits. But it needed capital.

So, lend some of the deposits which then come back as capital…..terribly naughty if that’s what they did do.

11 thoughts on “Hmm, so, did they?”

  1. So Much For Subtlety

    A great scheme if they did it. But perhaps with the economy in the shape it is in, we need to hold off on the inquiry. Until the banks are stronger.

  2. I can’t see how it is anymore scandalous than Brown’s stitch up of Lloyds or bailing out the dead carcass of RBS.

  3. The Meissen Bison

    So, lend some of the deposits which then come back as capital…..

    But the way you describe it, wasn’t the order the other way round? So the investment comes before and not after the loan and the Qataris are being lent their own money back again.

    Of course that may pose legitimate questions about Barclay’s overall exposure to Qatar and the basis on which the loan was negotiated and approved.

  4. Funny, if I were to deposit a sum of cash from somebody in a dodgy petro-state and then hand it straight back to them, cunts like Barclays would demand proof I wasn’t money laundering. Funny how all these concerns vanish when the sums get large enough, isn’t it?

  5. I’ve seen it claimed that there’s no real desire to act on some of the really big scandals (e.g. Forex manipulation) because the sums involved are so large that getting the wrong result would be game over even for banks like HSBC.

    In practice I suppose they’d find a way to blame individuals, not institutions, but still.

  6. You sure don’t get ulcers working for the tentacles of the State do you?
    Nine years and they are thinking of extending their enquiries?

    Don’t rush lads…

  7. And last week I was being accused of anti-semitic conspiracy theories over my appreciation of the doings of the banks.
    Dave. Dave? Fuck off, Dave.

  8. This doesn’t seem so bad, if when the dust clears the Qataris have really taken an equity stake in the bank (and taken on a loan). In that case the bank really has increased it’s capital base. I have known many valid transactions where the money “goes round in a circle”, but the key to understanding the purpose is to look at what happens in the legal agreements on each leg of the transaction.

  9. I should add that it doesn’t surprise me that it is the SFO that is looking into this. They are particularly dim about circular cash flows and don’t understand the point above. Nor do they understand the argument that ultimately all cash flows are circular. If I withdraw money from my bank account to pay someone else, they deposit the money with their bank who ultimately place their surplus funds in the same money market that my bank trades with, making the flow of funds circular even if the flow can’t be traced explicitly.

  10. Unless there’s something odd about the loan, for example that effectively make it limited recourse, I don’t see what the problem is because, as Alex says, the legal realities have changed.

    If Barclays were to go tits-up, which is what capital requirements are actually about, then the Qataris’ equity stake would become worthless, but their obligations under the loan would still stand. Barclays’ rights to that loan would be valuable (provided it’s on proper terms), and if necessary could be used as collateral or sold.

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