Former Barclays bankers charged over Libor allegations

The three men are the first former or existing Barclays staff named in criminal proceedings linked to interest rate fixing allegations

Three former Barclays bankers have been charged in relation to allegations of a conspiracy to manipulate Libor interest rates.

The Serious Fraud Office said the men were charged in connection with an allegation of conspiracy to defraud between 1 June 2005 and 31 August 2007.

The bank was fined £290m by US and UK regulators two years ago for a "serious, widespread" role in trying to manipulate Libor rates. There was no admission of criminal liability but the scandal ultimately led to the departure of the chief executive, Bob Diamond.

Although Barclays was the first of several banks to reach a regulatory settlement of Libor allegations, neither existing nor former employees had been named in criminal proceedings until Monday.

The focus of criminal proceedings until now has been a former Citigroupand UBS trader, Tom Hayes, who is charged with conspiracy to fix Libor with employees at eight other financial firms including Royal Bank of Scotland, JP Morgan Chase, Deutsche Bank, Icap, Tullett Prebon, Rabobank RP Martin and HSBC.

It is thought that the latest charges brought against former Barclays staff relate to a separate alleged conspiracy, unrelated to the alleged plots between August 2006 and September 2010 involving Hayes.

The three former Barclays bankers are Jonathan Mathew, who worked in the bank's treasury unit in London and left this position in September 2012, Peter Johnson, who is thought to have been a senior dollar Libor submitter in London, and Stylianos Contogoulas, a former trader at Barclays who moved to Merrill Lynch in July 2006 and left there in September 2011.

Barclays declined to comment.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

House price boom brings new wave of sellers into the market

Property website Rightmove says shortage of homes and buying frenzy have driven asking prices to record level

Surging house prices have prompted a wave of sellers to put their homes on the market, according to Britain's biggest property website, Rightmove, but it added that near-frenzied buying activity is sending asking prices to record levels.

The average asking price on the site jumped by £8,103 in January, equal to £261 a day, with the typical property now costing £251,964. Rightmove also said it had its 10 busiest days ever in January, with house hunters looking at 50m property pages a day for the first time, or about 500 a second.

The number of potential buyers sending emails to inquire about properties was also up around one-fifth compared with January last year and there was "firm evidence that interest is serious and being followed up", it said.

The booming market has provoked a big increase in the number of sellers, with 18% more properties being listed than a year ago. But Rightmove said it is yet to affect the supply shortage, as the number of homes being snapped up and removed from the site has risen in tandem.

Estate agents said they were also seeing more sellers come to the market. Haart, which is part of the largest estate agency group in the UK, said the number of properties advertised in its windows had increased by 10.6% over the past year. Its chief executive, Paul Smith, said: "It's good news that stock levels are increasing. However, new buyer registrations are up 41.2% annually so the market is still out of kilter."

The conventional approach to buying a home - where someone finds a house they like, then puts theirs up for sale – is breaking down in many local markets, where estate agents are not interested in prospective buyers unless they have sold already and can proceed immediately.

"Especially in the south, agents report that buyers with a property yet to sell are losing out to buyers able to proceed with speed," said Miles Shipside, a director and housing market analyst for Rightmove.

But bubble-like conditions in some parts of the country are making first-time buyers stretch themselves too far, warned the government-backed Money Advice Service. It researched 1,000 first-timers who had bought over the past two years, and found that one in five wished they had bought somewhere cheaper.

More than half admitted that the running cost of their first home was also more than expected, prompting the service to warn buyers: "You can afford your mortgage, but can you afford your home?"

Affordability is most stretched in London and the south-east. Haart said that over the past year, the average property it sold in London went up by 18.4% to £448,800, a rise of £69,784 over the year, double the average salary of a Londoner.

A Guardian/ICM poll last week found a growing exhaustion with rising house prices among the general population. Only 14% of people want house prices to continue to rise, while 63% would prefer they remain stable and 20% want prices to fall.

When asked to name the biggest problem in housing, 29% said it was buyers priced out of the market, a quarter said it was the lack of council housing, and 15% said it was excessive private rents.

But despite their despair over prices, most households expect them to continue to rise this year. A sentiment index produced by the upmarket agents Knight Frank found that households in every region of the UK perceive that the value of their home will rise over the next 12 months.

Expectations that rising interest rates may puncture a potential property bubble were dashed last week by the Bank of England governor, Mark Carney. He said he was comfortable with the City's view that interest rates would not rise before the spring of 2015 and then rise gently to 2% by 2017.

Figures from the Office for National Statistics suggest that higher house prices are also provoking a building boom. Figures released late last week revealed that in 2013 there was 1.3% annual growth in construction output, but it was "almost solely" attributed to house building, which jumped by 10.4% (£2.1bn) year on year.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

Lloyds in £1bn tax dispute with HMRC over Irish losses

Bank reveals it is in a £1bn tax dispute with HMRC over the way it has used losses from its Irish buisness to cut its tax bill

Lloyds Banking Group faces a £1bn tax demand from HMRC related to billions of pounds of loss taken in Ireland by the state-backed lender as it wound down its defunct Irish subsidiary.

The lender revealed it was warned in the second half of last year that the UK tax authorities were not happy with its treatment of Irish losses to offset its tax bill, prompting a legal dispute between Britain’s largest retail bank and HMRC.

If the case is decided in HMRC’s favour, Lloyds has said its tax bill will rise by £1bn, with the bank forced to pay a further £600m of tax, as well as write off a £400m deferred tax asset that it would currently be able to write off against future profits.

In a statement to investors the bank said: “The group does not agree with HMRC’s position and, having taken appropriate advice, does not consider that this is a case where additional tax will ultimately fall due.”

The disclosure of the tax dispute came as Lloyds published its full-year results, which showed the lender had made a pre-tax statutory profit of £415m, reversing a loss in 2012 of £606m.

On an underlying basis, which strips out provisions such as the £3.1bn set aside for payment protection insurance compensation costs, the bank made a profit of £6.2bn.

The profit is the bank’s first in three years and led Antonio Horta-Osorio, chief executive of Lloyds, to confirm he would accept a £1.7m all-share bonus for 2013. The bonus will be deferred until 2019 and will be subject to several performance hurdles linked to the future performance of the business.

As well as Mr Horta-Osorio’s own bonus, Lloyds confirmed it had put aside an overall staff bonus pool worth £395m, equating to an average payout to each of the bank’s staff of £4,500.

Sir Win Bischoff, chairman of Lloyds, said the payment of the bonuses was “proportionate and fair”, adding that the payouts at the bank were “lower than anyone else”.

In an unscheduled update this month, Lloyds pre-released its underlying profit and PPI provision figures as they differed materially from market expectations.

Mr Horta-Osorio said Lloyds had been transformed into a “normal bank”, five years on from its state-funded rescue that saw the taxpayer take a 39pc stake in the bank, since reduced to 33pc.

Lloyds is in the process of preparing a prospectus for a second sale of the state’s holding in the bank that is expected to see the Treasury authorise a further disposal of the shares within months, including a first offer of the stock to the general public.

Mr Horta-Osorio said: “We have continued to improve the bank and the price [of the shares] is substantially above the price at which the first tranche was sold in September, 75p, and the bank is ready to sell another tranche, but it is absolutely up to the UK Treasury to decide when and how to do it.”

Shares in Lloyds fell on Thursday, closing the trading session down 2.72pc at 81.26p, valuing the bank at £41.2bn. However, even at this share price the stock is well above the Treasury’s break even point of 73.6p.

As part of the continuing turnaround of the lender, Mr Horta-Osorio said work had begun on an updated strategy for the bank that will map out its objectives for the next three years. The Lloyds chief said the plans would be published before the end of the year.

“Over the last three years we have reshaped, strengthened and simplified our business to create a low-risk efficient retail and commercial bank that is focused on our customers and on helping Britain prosper. This progress has seen the Group return to statutory profit in 2013 and despite our legacy issues, further strengthen our capital position,” said Mr Horta-Osorio.

He added: “As a result we expect to apply to the regulator in the second half of the year to restart dividend payments. This will be another important milestone on our journey to rebuild trust and confidence in our Group”

Lloyds will in the summer launch the £1.5bn float its 631-branch TSB subsidiary through a listing on the London market.

However, after spending £1.6bn to create the business as part of a European Commission ordered disposal necessitated by its 2008 bailout the sale is not expected to generate a profit for the bank.

The TSB business, previously known as Project Verde, had originally been expected to be sold to the Co-op Bank, but the troubled lender was eventually forced to pull out of the deal as the extent of its own capital problems became clear.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

Barclays cull to clear out senior bankers

Barclays is planning to cut 820 managing director and director-level staff, of which about half are expected to come from its investment banking arm, as part of an effort to reduce costs

Hundreds of senior Barclays investment bankers and managers face being made redundant this year, along with thousands of ordinary staff, as the lender looks to cut as many as 12,000 jobs.

Barclays is planning to cut 820 managing director and director-level staff, of which about half are expected to come from its investment banking arm, as part of an effort to reduce costs across the bank.

UK-based staff will bear more than half of the overall job cuts, with Barclays set to make about 7,000 British staff redundant as it increasingly uses IT to replace jobs and accelerates the closure of branches.

At present, Barclays employs almost 140,000 staff in offices and branches across the world.

Officials from the Unite union yesterday held talks with the bank at its London headquarters to discuss the cuts, which come as the country’s other major high street banks all continue to look for further cost savings

The job losses came as Barclays said it would increase the size of the average bonus paid to its investment bankers by 10pc to £60,100, despite a 37pc fall in the division’s profits last year.

The fall was largely caused by a slowdown in trading activity in the final three months of last year, which led the investment bank to record a loss for the period of £329m.

The Institute of Directors said: “[It] cannot be right in any business for the executive bonus pool to be nearly three times bigger than the total dividend payout to the company’s owners.”

It added: “We would like to see shareholders take a more aggressive role in the governance of the bank.”

Shareholder dividends for 2013 will total £859m, compared to a total staff bonus pool for last year of £2.38bn. This equates to a dividend-to-compensation ratio of 2.77, a slight improvement on last year’s figure of 2.98, when the bank paid out £733m to its investors, but £2.17bn in bonuses.

Andrew Tyrie MP, chairman of the Treasury select committee, questioned Barclays’ decision to defer bonuses by just three years amid a push to extend deferral periods out to at least five years.

“Barclays’ bonus deferral, at three years, looks too short. Shareholders also need to make up their minds whether aggregate remuneration is justified by the return on equity,” said Mr Tyrie.

Fears over the bank’s performance led its shares to trade down more than 7pc at points during yesterday’s session, but the stock rallied to close down 2.17pc at 269.03p, valuing the lender at £43.4bn.

Among the disappointments in Barclays’ results was its continuing inability to generate a return on shareholder equity which, measured on a statutory basis, is just 1pc – while the bank’s cost of equity is put at 11.5pc.

Antony Jenkins, chief executive of Barclays, said he hoped to improve returns so that by 2016 the business would be making a return greater than its cost of equity and defended the bank’s bonuses.

“We need to recruit people from Singapore to San Francisco. We need the best people in the bank to drive long-term sustainable returns for our shareholders,” said Mr Jenkins.

“I understand that there will be some (people) who feel that this decision is the wrong one for Barclays. But it is the decision of the board and myself that this entirely is the right decision for the group and in the long-term interests of shareholders,” he said.

“At Barclays we believe in paying for performance and paying competitively. Ensuring that we have the right people in the right roles serving our customers and clients effectively in a highly competitive global environment is vital to our ability to generate sustainable shareholder returns.”

The release of the results followed two unscheduled announcements in the past two weeks of various financial figures by Barclays. Last month, the bank published a surprise update pointing to its progress on hitting its cost targets and the size of fourth-quarter charges for litigation and financial penalties.

This was followed on Monday by a second announcement following the apparent leak of sensitive financial data that forced Barclays to publish its pre-tax profit figures one day ahead of schedule, which showed it had made a statutory pre-tax profit of £2.9bn and £5.2bn after adjusting for one-off items.

Barclays is the first major British lender to report its full-year results and will be followed tomorrow by Lloyds Banking Group.

In the case of Lloyds, the bank has already published its pre-tax profits after its own unscheduled update this month where it said it had made an underlying profit for last year of £6.2bn.

Concerns were also raised over the fall in the bank’s Tier 1 core capital ratio, which fell from 9.6pc at the end of the third quarter to 9.3pc by the end of last year.

The fall was driven by larger-than-expected regulatory capital requirements and highlighted the increased capital costs the bank will face as it attempts to improve returns.

Filippo Alloatti, a senior analyst at fund manager Hermes, warned that Barclays executives faced a “conundrum”. He said:

“The much-maligned investment bank is still generating more than 60pc of group profits, helping to slowly expand its capital base and pay a dividend. However, the very same investment bank is, considering Basel [III capital] requirements and the Financial Stability Board’s mandate, limiting the strategic options for Barclays.”

Mr Jenkins said banking was going through a “100-year transformation” as technology and cost pressures reshape the industry, and he was optimistic that Barclays was well set for a “pivotal” 2014.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

Bank of England launches inquiry into forex manipulation claims

Senior currency trader says Bank officials condoned information sharing between traders under investigation

The Bank of England has launched an internal inquiry into allegations that its officials endorsed sharing of information between traders in the foreign exchange market, the central bank's deputy governor told MPs.

The inquiry will examine claims that at a meeting between Bank officials and senior currency traders last April the officials said it was permissible for traders in different banks to share information about clients' positions ahead of the setting of a benchmark rate in the foreign exchange market.

Andrew Bailey told the Treasury select committee: "The governors of the Bank have taken the claims about the meeting with the Bank's officials extremely seriously since we first heard about these allegations. Just so you know, we first heard about them in October.

"The governors immediately initiated a full review into it led by the Bank of England's legal counsel but also supported by external legal counsel and also in close collaboration with the FCA [financial conduct authority]."

Bailey, who is in charge of supervising financial firms, said the Bank had found no evidence that officials had endorsed sharing of information but added: "We do not regard that review as over."

Bloomberg News reported last week that a senior currency trader had informed the financial conduct authority that Bank staff at the April meeting had condoned information sharing. Alleged collusion in setting benchmark rates in the foreign exchange market is at the centre of allegations of market manipulation that could be as big as the Libor scandal.

Bailey said the Bank's inquiry had not yet seen the anonymous trader's notes from the meeting.

Bailey agreed with committee member Pat McFadden that if true the allegations would be "extremely damaging" to the Bank's reputation.

"I agree with you on that. That is why we have set up this investigation and this process," Bailey said. "The governors take the whole question of the reputation and integrity of the central bank extremely seriously. It's the most important thing we have."

The benchmark in question is used to price a wide variety of financial products and is the subject of regulators' attention amid allegations that traders at rival banks were sharing information about their orders from clients to manipulate the price.

A record of the April meeting released by the Bank showed it was chaired by Martin Mallett, its chief currency dealer, and included an entry entitled "extra item". The record says: "Processes around fixes. There was a brief discussion on extra levels of compliance that many bank trading desks were subject to when managing client risks around the main set-piece benchmark fixings."

Martin Wheatley, chief executive of the FCA, which is in charge of stamping out market abuse, told MPs last week that the allegations were "every bit as bad" as those surrounding Libor. Banks have been fined billions of pounds over the Libor scandal.

The meeting was between senior traders at investment banks and a subcommittee of the Bank's foreign exchange standing committee. Bloomberg was told that during a 15-minute conversation about currency benchmarks traders said they used chat rooms to match buyers and sellers ahead of the one-minute period when rates were fixed to avoid trading at a volatile time.

The officials are alleged to have said the practice might benefit markets because it made them more stable.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

Barclays hikes bonuses amid warning on jobs and fall in profits

Bonuses for investment bankers rise to £1.6bn despite fall in profits and warning of up to 12,000 job cuts this year

Barclays stoked the row over City pay on Tuesday by announcing a 32% fall in profits but a rise of 10% in the bonus pool for its 140,000 staff around the world.

Antony Jenkins, promoted to run Barclays in the wake of the £290m fine for rigging Libor, defended the decision to increase bonus payouts as he warned that between 10,000 to 12,000 jobs would be cut this year as he races to cut costs. Some 820 senior roles are to go along with 7,000 jobs in the UK.

In a move that sparked the fury of the TUC, which accused the bank of "sticking two fingers up to hard-pressed families across Britain", the bank announced it was paying bonuses of £2.4bn – up from £2.2bn a year ago – across the bank. Within that, the investment bankers enjoyed bonuses of £1.6bn compared with £1.4bn a year ago, even though the investment banking side suffered a loss in the fourth quarter and its annual profits tumbled 37%. The bank as a whole saw its profits fall to £5.2bn from £7bn.

Labour seized upon the numbers to call for a reintroduction of the bonus tax which Cathy Jamieson, shadow financial secretary to the Treasury, said "could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits".

The profit figures, announced 24 hours earlier than scheduled, on Monday, because of a fears of a leak, showed that on a statutory basis – including accounting quirks and other one-off items – the profits rose to £2.9bn. This was also the year that the bank tapped shareholders for £5.8bn.

Jenkins admitted that he only discovered the theft of confidential customer files – 2,000 names, addresses, phone numbers, passport numbers and details of personal finances – which is now the subject of regulatory scrutiny, after being informed of the loss by the Mail of Sunday. Only 300 of the 2,000 individuals affected have been contacted by the bank.

Frances O'Grady, general secretary of the TUC, said: "Today Barclays has stuck two fingers up to hard-pressed families across Britain by announcing another multi-billion pound bonus pool". In reference to the EU's cap on bonuses to 100% of salary, O'Grady added: "But rather than tackle the damaging City bonus culture, the Chancellor has been to Brussels to defend their greed".

Jenkin justified the hike in bonuses – despite his pledge to show pay restraint and waiving his own £2.75m bonus – by insisting the bank needed to pay staff in a globally competitive environment. He also insisted the bank was acting within the "spirit and letter" of the law by paying monthly role-based allowanced to key staff who might otherwise take pay cuts as a result of the bonus cap.

"We employ people from Singapore to San Francisco. We compete in global markets for talent. If we are to act in the best interests of our shareholders, we have to make sure we have the best people in the firm," Jenkins said.

"At Barclays we believe in paying for performance and paying competitively. Ensuring that we have the right people in the right roles serving our customers and clients effectively in a highly competitive global environment is vital to our ability to generate sustainable shareholder returns," he said.

"After careful consideration, we determined that an increase of £210m over the prior year in the incentive pool was required in 2013 in order to build our franchise in the long term interests of shareholders."

Even though the bank tapped shareholders for £5.8bn of fresh funds last year under instruction from the Bank of England, the average bonus per staff member was £17,000 up from £15,600 while the average investment banker received £60,100 up from £54,500.

Jenkins, who has set out to make Barclays the "go to" bank, has forced every staff member to embark on ethics training and set out eight new goals against staff will be measured in the future. One of his targets is increasing the number of senior women from 21% to 26% by 2018.

Jenkins regularly describes the changes that technology will impose on the banking industry - he is thought to believe that as many as 40,000 roles could eventually go from the 140,000 workforce - and on Tuesday described a "one in a hundred year transformation" of the industry. Half of the 7,000 of the jobs being axed in the UK have already been announced and branches are eventually expected to close.

He insisted that bonuses were down from 2010 by 32%.

The bank is fighting a £50m fine from the Financial Conduct Authority for discloses it make during the time of a crucial funding raising in 2008 but said this process had now been stayed while the Serious Fraud Office investigated.

The dividend for the year is 6.5p, the same as last year. The shares were down 2% at 269p in early trading.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook

UK trade deficit narrows but manufacturing weakens

An increase in oil, chemical and aircraft exports helped the trade deficit in goods to fall by more than £2bn to £7.72bn, the ONS said. Fewer imports of aircraft and ships also boosted the figures, it said.Manufacturing output rose by 0.3% in December, less than the 0.6% predicted. The wider measure of industrial output rose by 0.4% in the month.

However, the ONS said the weaker-than-expected growth was not enough to change the estimate of GDP growth in the fourth quarter of 2013, which was 0.7%.

When services were included, the overall trade deficit narrowed to £1bn in December. This was down from a deficit of £3.6bn the month earlier and also the smallest deficit since July 2012.

'Even picture'
Despite the weaker-than-expected manufacturing figures, Lee Hopley, chief economist at the EEF manufacturers' organisation, remained upbeat.

"Manufacturers had a strong finish to 2013, but more encouraging, are the indicators we've seen since the start of the year which suggest that positive trend has rolled into the early part of 2014.

"Our expectation is that we see another quarter of 0.6% expansion in the three months to March, with a pretty even picture across sectors.

Ms Hopley added that export demand would "gather pace" through the year, and the official data would follow.

The UK's economy grew last year at its fastest pace since 2007, expanding by 1.9%.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us also On Facebook