Barclays Appoints Former British Regulator As Head of Compliance

Barclays Appoints Former British Regulator As Head of Compliance

LONDON – Barclays appointed Hector Sants, the former chief of the British financial regulator, the new head of compliance on Wednesday, as the bank attempts to revamp its image in the wake of the rate-rigging scandal.

In June, the British bank agreed to a $ 450 million settlement with American and British authorities over allegations that some of its traders reported false interest rates for financial gain. The case led to the resignation of several top executives, including the firm’s chief, Robert E. Diamond, Jr.

The scandal also prompted questions about the role of the Financial Services Authority, the British regulator, in policing big banks. In 2008, an employee at Barclays told the F.S.A. that it was lowering its submissions for London interbank offered rate, or Libor, although the bank never specifically said the activities amounted to manipulation.

Since the summer, Barclays has moved to rethink its compliance and risk-taking activities. The British bank is currently undertaking a review of its risky trading operations, and is expected to announce an overhaul of many of its business units at its next earnings statement in February.

By appointing Mr. Sants, Barclays is hoping tap his experience working with many of the world’s financial regulators. A former UBS investment banker, Mr. Sants left the Financial Services Authority in June.

As the new head of compliance and government and regulatory regulations, Mr. Sants will oversee compliance across all of Barclays’ operations, and report directly to the bank’s chief executive, Antony Jenkins. He will start at the beginning of next year.

“Relationships with our regulators and governments around the world are obviously also of critical importance to us,” Mr. Jenkins said in a statement on Wednesday. “We must apply a renewed leadership focus on these to make them as constructive and productive as possible.”

But the appointment follows harsh criticism from British politicians that the Financial Services Authority did not do enough to monitor risky trading activity in London’s financial services sector.

In tense testimony in front of the British parliament earlier this year, Adair Turner, the former chairman of the Financial Services Authority, faced questions about the culture at Barclays that led to the rate-rigging scandal.

Last April, Mr. Turner had written to Barclay’s then-chairman, Marcus Agius, about what the regulator perceived as overly aggressive practices at the British bank. The concerns focused on efforts to avoid paying around $ 770 million in corporate taxes and some of the bank’s accounting methods.

“Barclays often seems to be seeking to gain advantage through the use of complex structures, or through regulatory approaches which are at the aggressive end of interpretation of the relevant rules and regulations,” Mr. Turner wrote, according to documents released by the British parliament.

Mr. Sants did raise early concerns about the culture at Barclays. After naming Mr. Diamond as chief, the regulator warned the Barclays board that about that the executive had “not reached the level of openness, transparency and willing to air issues” with regulators,” according to an e-mail. “I’d like to record that in that conversation, I made clear that our concerns about Barclay’s culture were not some generic observation but specific to Barclays,” Mr. Sants wrote in a 2012 letter to Parliament.

After the Barclays case, the Financial Services Authority conducted a three-month review of the Libor setting process that has led to a major overhaul of the rate. The British regulator acknowledged that authorities should have stepped in sooner to fix the problems with Libor. It also laid out plans to make it a criminal offense to alter the rate, and to implement a new auditing system to ensure traders can not unfairly profit from small changes in the rate.

The changes come less than a year before Financial Services Authority will be disbanded. Many of its regulatory powers to be returned to the Bank of England, the country’s central bank. Along with its U.S. counterparts, the Financial Services Authority’s enforcement division continues to investigate the rate-setting process at world’s largest financial institutions.


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