May 15, 2019

BoE warned prosecution could destablise Barclays

The Bank of England warned prosecutors that a criminal charge against Barclays could present an existential threat to the lender, showing that regulators still worry about large banks being "Too big to jail". In 2012, George Osborne, then UK chancellor, wrote to then Federal Reserve chairman Ben Bernanke to express concern about the impact of criminal charges on British banks such as HSBC. In the past few years the US Department of Justice has pursued criminal charges against a succession of international banks without causing serious collateral damage. The charges turned on £322m of side deals and a $3bn loan the bank extended to Qatar in 2008, as Barclays twice turned to the Gulf state in emergency cash calls that kept the bank from a government bail-out. The charges against the bank were ultimately scrubbed by the courts last year and the bank has not had to stand trial. In the first half of 2017, the BoE was still under an unprecedented criminal investigation by the SFO over money-market auctions the central bank held at the onset of the financial crisis, and whether banks and building societies were told by the BoE to bid for liquidity funding at a particular rate to minimise questions about the health of their ­balance sheets.

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