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Bankers feared pay cuts if state had nationalised Barclays in 2008, court hears

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Bonus panic: Former Barclays head of investment banking and investment management in the Middle East, Roger Jenkins arrives at Southwark Crown Court on January 14, 2019 in London, England. Photo: Jack Taylor/Getty Images

Barclays bankers “panicked” about what a government bailout at the height of the financial crisis would mean for multimillion pound pay packets, a court was told on Monday.

The defendants in the case are: John Varley, who was CEO of Barclays between 2004 and 2011; Roger Jenkins, who formerly ran Barclays Capital’s investment management business in the Middle East and North Africa; Thomas Kalaris, the former CEO of Barclays’ wealth and investment management; and Richard Boath, the former head of European financial institutions group at Barclays Capital.

Varley and Jenkins each face two counts of conspiracy to commit fraud, and Kalaris and Boath each face one. All four defendants have pleaded not guilty. Qatar is not accused of any wrongdoing.

The jury at Southwark Crown Court heard transcript of calls between senior executives at the bank as part of a case related to Qatari fundraising by the bank in 2008. The multibillion pound investments received that year helped Barclays to avoid a state bailout.

In the transcript of one call from October 2008, Jenkins said: “I was panicking that we were about to get nationalised and you guys must have been the same because the government would, wouldn’t look kindly on compensation over a million dollars.”

Jenkins, one of four defendants in the case, was head of Barclays Capital’s investment management business in the Middle East and North Africa at the time. His total pay packet in 2007 was £37.5m, Edward Brown QC told the jury.

Jeff Weiss, another BarCap executive, said on the same call he “just figured they’d take [then Barclays CEO John] Varley and [then BarCap CEO] Diamond’s compensation down to a reasonable amount.” Weiss is not accused of any wrongdoing.

Later in the same call Jenkins said: “If we don’t have to go to the government we don’t have to disclose your, yours and Jeff’s comps [compensation] because mine’s nothing.”

Evidence presented on Monday also showed that the issue of executive pay was raised at board level at the time.

The board discussed whether Barclays should utilise the government’s offer of new capital but noted that there would inevitably be constraints placed on the bank relating to dividends, operational flexibility, and executive compensation,” minutes of a meeting from October 2008 read to the jury said.

READ MORE:  ‘We’re f***ed’: Court hears Barclays bankers panicked over Qatari fundraising ‘nightmare’

In a separate call transcript, Jenkins said then CEO Varley was “scared to death that the government turn up tomorrow morning” and said then Barclays Capital CEO Bob Diamond was “fucking paranoid” about the bank being nationalised and the possibility of losing his job.

The transcripts and board notes surfaced as part of an ongoing case against four former Barclays bankers accused of misleading investors during two investments in 2008 that helped save the bank from government intervention.

Barclays raised £11.8bn in 2008 in two fundraising rounds. Qatar invested £4.4bn in total that year. The Serious Fraud Office (SFO), which is prosecuting the case, claims that the four Barclays executives sought to illegally disguise fees paid to Qatar for their investment under Advisory Service Agreements that were simply “smokescreens.” It claims they did so in order to avoid paying the higher fees to other investors who also backed Barclays at the time.

Brown, the SFO’s lead lawyer, told the jury after presenting evidence of the pay discussions: “You may think that some of these defendants were highly motivated to keep their jobs.”

The case is ongoing and expected to last up to six months.

Read more on the trial of the Barclays four: