The UK’s biggest lenders can’t seem to get a break as they continue to tackle lawsuits and investigations.
For Barclays plc (LON:BARC), its latest drama is over an investigation by UK regulators into the way its chief executive handled a whistleblower.
The bank revealed today that boss Jes Staley had “mistakenly” tried to unmask the identity of a person who raised concerns about the conduct of a senior employee at the bank in an anonymous 2016 letter.
READ: Barclays chief investigated over whistle-blowing claims ...
WATCH: Barclays CEO Staley should 'reconsider his future', says BGC Partners' Mike Ingram
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Chairman John McFarlane explained that Staley was trying to protect a colleague who had experienced "personal difficulties in the past from what he believed to be an unfair attack”.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are now looking into Staley's behaviour and the bank’s whistleblowing procedures.
The board will also make a "very significant compensation adjustment" to Staley's variable pay award as punishment but has recommended he keep his position.
The problems don’t end there for Barclays.
Last month the FCA reportedly re-opened its investigation into Barclays' 2008 emergency fundraising from Qatar after the bank handed over about 100,000 documents to the Serious Fraud Office.
Barclays has already paid a £50mln fine in 2013 for failing to disclose £322mln of fees for so-called “advisory services” it paid to the Qatari investors who invested in the bank.
In December, it emerged that Barclays faced a lawsuit by the US Department of Justice on allegations it deliberately mis-sold mortgage bonds. The DoJ accused the bank of jeopardising the financial position of millions of American homeowners and contributing to the financial crisis.
Barclays most prominent scandal was in 2012 when it paid a £290mln fine to US and UK authorities for rigging Libor, which sets the rate at which banks can borrow from one another.
Lloyds grapples with HBOS lawsuits ...
Lloyds Banking Group plc’s (LON:LLOY) biggest legal troubles stem from its HBOS subsidiary.
Six people were jailed earlier this year over fraud involving two former bankers at the HBOS Reading branch who helped siphoned off money from struggling businesses, which were clients of the business.
Lloyds, which bought HBOS in a rescue deal during the 2008 financial crisis, said on Friday it was setting aside £100mln to compensate victims. The fraud is estimated to have cost victims £245mln.
The FCA has resumed its investigation of the case after placing its probe on hold 2013 as it awaited the outcome of the police inquiry
The regulator, which began its investigation in 2010, said the review would focus on the extent to which HBOS knew about the issue and its communications with former City watchdog, the Financial Services Authority.
The regulator's announcement follows reports that two former employees of HBOS face prosecution for allegedly covering up the fraud for nine years.
Trial to come ...
Lloyds also faces trial in October over its acquisition of HBOS. The bank is accused of failing to disclose the extent of the financial difficulties of HBOS ahead of the takeover.
Law firm Harcus Sinclair, which is representing the plaintiffs, said shareholders suffered about £6bn in losses. Damon Parker, a director of the law firm, told Proactive Investors there were up to 7,000 shareholders and 200 institutional investors seeking compensation.
In a separate legacy issue, Lloyds said last month it was putting aside a further £350mln to cover claims for mis-sold payment protection insurance (PPI) after the FCA moved its deadline for new complaints.
Lloyds, which is now just 1.97% owned by the taxpayer, was fined £117mln by the City watchdog in 2015 for mishandling PPI complaints.
In 2014, the bank was fined £218mln by the FCA and US regulators for its part in the rigging of international banking lending rates.
Regulators said Lloyds manipulated Libor for yen and sterling and tried to rig the rate for yen, sterling and the US dollar.
It emerged last month that UK prosecutors have called in a number of former Lloyds Libor traders for questioning over the case. Bloomberg reported that the Serious Fraud Office asked the traders to come in for interviews under caution, which are generally conducted with possible suspects.
RBS facing big legal bill...
Royal Bank of Scotland Group plc (LON:RBS) is facing a £125mln bill for legal costs as it defends itself against accusations of misleading investors over its financial position in the lead up to its 2008 rights issue.
The 73% state-owned lender is being sued by former shareholders affected by the £12bn fundraising, which preceded the bank’s £45bn government bailout during the financial crisis.
The RBoS Shareholder Action Group, which counts 27,000 former RBS shareholders among its members, is the last-remaining claimant seeking compensation for losing money after subscribing to new shares in the bank.
Last December, the bank paid a 21p-per-share settlement to institutional investors represented by Stewarts Law and Quinn Emanuel Urquhart & Sullivan.
In January, RBS said it had also set aside a further US$3.8bn to cover fines in the US over the way it packaged and sold mortgages before the financial crisis. It has now put aside a total £6.7bn to cover litigation by the DoJ.
RBS was also fined £390mln by UK and US authorities in 2013 for its part in the Libor rate-fixing scandal.
HSBC appeals Euribor fine..
HSBC Holdings is heading to court to appeal a €33.5mln penalty by the European Commission in December 2016 for allegedly colluding with other banks to rig Euribor, a key financial benchmark, between September 2005 and May 2008.
The bank has filed appeals at the EU General Court along with JPMorgan Chase & Co. and Credit Agricole.
In early 2016, the company was also fined US$470mln to settle US federal and state investigations into “abusive mortgage practices”. HSBC allegedly “robo-signed” thousands of foreclosure documents during the financial crisis, which led to millions of people losing their homes.
A few months later HSBC agreed to pay US$1.6bn to settle a 14-year lawsuit stemming from the Household International consumer finance business it bought in 2003. Shareholders accused Household International, now known as HSBC Finance, of inflating its share price and engaging in misleading lending practices.
In 2011 the bank said it would pay US$62.5mln to settle legal action in New York filed by Bernard Madoff's fraud victims. It paid the money to investors in Thema International Fund, which acted as a feeder fund to Madoff. HSBC units acted as custodian for Thema.
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