July 28, 2013 9:11 pm

Treasury pledges extra £2m for Barclays probe

The Barclays headquarters building is seen in the Canary Wharf business district of London©Reuters

The UK Treasury is expected to pledge special “blockbuster” funding to the Serious Fraud Office to back its investigation into Barclays’ emergency fundraising five years ago, in a sign of the agency’s escalating probe into the bank.

The cash-strapped SFO, which launched a criminal investigation into the UK bank a year ago, is set to secure around £2m in special funding, the Financial Times has learnt – only the second blockbuster allocation of recent times.

The SFO’s director, David Green, negotiated a similar arrangement for the agency’s sprawling investigation into Libor manipulation, in which Barclays is also a target.

The SFO traditionally had more routine recourse to blockbuster funding but under Mr Green’s predecessor, Richard Alderman, the arrangement floundered after a series of minor spats with Whitehall, according to people familiar with the situation.

The SFO said it could neither confirm nor deny special funding for the Barclays probe, and declined to comment further. It has previously said that blockbuster funding is a “hard-nosed yet flexible way of boosting finite resources”.

While it has had a recent 5 per cent increase in its baseline funding, to £30m for 2015-16, this compares with a high of £52m in 2008.

The agency announced in August 2012 that it had “opened an investigation into certain commercial arrangements between Barclays Bank and Qatar Holding in 2008”.

So far, the bank has been far more deeply investigated by the UK’s Financial Conduct Authority, and its predecessor organisation, the Financial Services Authority, according to people familiar with the probes.

However, the FCA is now taking a back seat, as the SFO broadens its probe to other parts of Barclays’ 2008 fundraising. It was already examining the £66m of arrangement fees paid to Qatar Holding, and an allegation that the bank secretly loaned Qatar the money to reinvest in the bank.

Barclays’ first cash call, in June 2008, saw Qatar Holding, Challenger – the investment vehicle of Sheikh Hamad bin Jassim bin Jabr al-Thani, the emirate’s former prime minister – and other sovereign wealth funds invest a total of £4.5bn in the bank. A second £7.3bn capital raising in October 2008, also involved Abu Dhabi. The two fundraisings enabled the bank to stay out of government control.

Barclays declined to comment.

The bank is due to announce second-quarter results on Tuesday, with underlying pre-tax profit expected to be up 19 per cent at £2.1bn, according to a Bloomberg poll. The bank will also set out how it plans to come into line with fresh regulatory requirements on leverage, with a potential £4bn rights issue under discussion, according to bankers.

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