- Former Barclays chairman Marcus Agius is giving evidence as part of a major trial relating to alleged fraudulent behaviour by bank executives during the 2008 financial crisis.
- Agius, chairman between 2007 and 2012, feared that key executives could resign as the crisis deepened.
- The ex-chairman also detailed the “complex and complicated” process of raising capital in what was “an extremely uncertain, febrile period.”
- The defendants, former CEO John Varley, Richard Boath, Tom Kalaris, and Roger Jenkins, have pleaded not guilty to all charges.
The former chairman of Barclays feared resignations from key executives during a difficult period for the bank as it sought to raise capital during the financial crisis.
Marcus Agius, chairman of Barclays between 2007 and 2012, gave testimony in front of a packed court in London Tuesday. “Any one of them might have said, ‘This wasn’t what I signed up for, how do I get out of here?,'” the jury heard.
The Serious Fraud Office (SFO) alleges that former Barclays CEO John Varley and other executives – Richard Boath, Thomas Kalaris, and Roger Jenkins – misled investors during the financial crisis in raising funds via financial instruments called “Advisory Service Agreements” (ASAs). The SFO alleges that the deals paid Qatari companies £322 million ($US423 million) – a 3.25% commission – in secret fees during capital raisings that were not properly disclosed to other investors.
The defendants pleaded not guilty to all charges.
The court heard details of how Barclays executives endured an “unsettling, nervous time” during the financial crisis in 2008. “I’m clear that in June 2008 we at Barclays did not anticipate how much worse things were going to get,” Agius said. “I don’t think we thought it was going to go as badly as it ultimately did.”
Agius added that Barclay’s desire to raise capital quickly was borne of a view that the world was a “more risky place”, particularly in light of the failures of British bank Northern Rock and American lender Bear Stearns earlier in 2008.
He added: “It was an extremely uncertain febrile period.”
“Too clever by half”
Barclays raised billions of pounds in capital from Qatari investors in two transactions in 2008 in what was a “fast-moving and stressful time.” Agius said that at the time of the first capital raise his concern that the deal Barclays was doing could be seen as “too clever by half.”
He cited the fact that executives were negotiating potential fundraising with China Development Bank, Sumitomo, and Temasek alongside Qatar Holdings. Agius added “raising money was a complex and complicated thing to do. It requires a great deal of dexterity and there are a number of moving parts.”
As a result, Agius’s role in managing the board became a more difficult. The former chairman noted that “managing the board at that time was more full-time than it would normally have been in quieter times.”
The allegations that some investors in the bank may have been paid higher commission rates than others would have been, in Agius’ view, completely against “market practice.” Agius added there was “widespread” knowledge that commissions and fees paid to all investors had to be equal and had to be disclosed within the investor prospectus – a “crucial” document for fundraising.
The trial is ongoing at Southwark Crown Court in London.
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