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Barclays Bank Could Be At Risk Due To $3 Billion Qatar Loan

The British banking system took a massive hit during the 2007-2008 recession and a number of top banks including Lloyds Banking Group and the Royal Bank of Scotland require a government bailout. Barclays Bank Plc. did not require a bailout as the bank decided to raise its own funds by campaigning in Singapore and the United Arab Emirates.

Part of the fundraising process was a $3 billion loan the UK made to Qatar. That loan has now come back to hurt Barclays as the Serious Fraud Office (SFO) has brought criminal charges against four former bank executives as well as the bank's holding company.

The case matters because if Barclay's holding company were to be found guilty in the case, the Financial Conduct Authority (FCA) would have the power to strip Barclays of their banking license. If this happens the result would be that Barclays would have to close their high street branches.

Financial Times

The likelihood of this happening is very slim as the former executives along with Barclays will be contesting the charges. However one must also consider that slim chance could force Barclays to close and leave thousands of employees redundant.

Once the case goes to court, the SFO would also have to prove that there was something illegal about the loan to Qatar and if the four former executives had something to do with the illegal activity. There is also the fact that it has been 10 years since the loan, so any consequences that the bank could face would most likely be minimal.

Barclays' parent company has already been charged by the SFO with two counts of fraud by false representation and one count of unlawful financial assistance over the agreements the bank made with Qatar.

These charges are in relation to Barclays former chief executive John Varley being charged by the SFO as well for the same counts. The charges against Varley marks the first time a chief executive of a large global bank has been charged as a result of alleged illegal actions during the UK banking crisis.

Barclays released a statement regarding the charges the SFO has made against it. The statement says that both Barclays PLC and Barclays Bank Plc intend to defend themselves against the respective charges that have been made against them. The statement goes on to say that Barclays does not believe that the charges will have a major impact on the ability of the bank to continue to serve its customers.

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