Barclays Bank Second Investigation

Barclays bank after being investigated and fined over £290m in the Libor scandal case and have to pay over £450m on mis-selling products to customers have find itself in another pitfall over its transaction in 2007. This latest investigation is about the funds raised from investors in Abu Dhabi and Qatar sovereign wealth funds just after the financial crisis.

The previous LIBOR investigation claims some causalities which includes the CEO Robert Diamond and the Chairman which will leave soon. This probe is about disclosure of the fees the bank intends to pay the Qatari authority. The 7 billion pounds raised from the middle east helps it to weather the storm in 2007 and eventually avoided any bailout funds from the UK government.

The bank however has appointed Antony Jenkins who runs Barclays Retail and Business Banking has the new chief executive with a basic salary of £1.1m and a performance bonus of up to 250% of his salary. The new CEO takes over at a very difficult time when the bank is facing a running battle with regulators as well as its reputation been damaged.

This series of investigation into the banks will however have a significant impact on its profit for the second half of the year.

Financial Services Authority (FSA) and Libor Investigation

Does Libor come across to you as one of those financial jargon that is difficult to comprehend? In simple terms it is the interest or better still rate banks lend or borrow to each other on a short term basis and it is been calculated daily by financial data firm. They can be used to ascertain the condition of a country's financial system as well as the indication of a banks strength. These rates eventually affects you through the interest these banks charge on the credit card you have with them, interest you pay on your mortgages or the cost of borrowing from a bank as an entrepreneur.

FSA is the body that is tasked primarily with the responsibility to regulate the financial services industry in the United kingdom. Two of Its statutory responsibilities are to reduce financial crime and consumer protection but looking at the London Inter Bank Offered Rate Libor scandal, it looks like they are not alive to their responsibilities when needed.

It is appalling to know that it took American regulators (Federal Reserve Bank New York) to do the work of FSA, by identifying this scandal almost 5 years ago and informed FSA but the almighty regulator (FSA) did relatively nothing until it became widespread. It also took another American regulator the Commodity Futures Trading Commission (CFTC) to impose the first fine on Barclays before FSA woke up from its slumber.

The question that comes to mind is why the FSA did not perform its statutory responsibilities to the public after red flag been raised about improper conduct by the American regulator. Well the hope of the public is on the breakdown of FSA into 2 new regulators with definite responsibilities and powers to specifically regulate and supervise financial services industry in the United Kingdom.