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Barclays fights UK watchdog findings on Qatar deal

The Barclays logo is seen on a rental bike being ridden by a commuter in London February 12, 2013. REUTERS/Toby Melville
The Barclays logo is seen on a rental bike being ridden by a commuter in London February 12, 2013. REUTERS/Toby Melville

By Kirstin Ridley and Steve Slater

LONDON (Reuters) - Barclays said on Tuesday it was contesting the preliminary findings of a British regulatory probe into its commercial agreements with Qatari investors who led a rescue fundraising of the bank during the 2008 financial crisis.

Neither Barclays nor the Financial Conduct Authority (FCA) disclosed what the preliminary findings were. But the bank said it received them on June 27 and contested them five days ago.

The FCA and Britain's Serious Fraud Office (SFO) have been investigating for about a year the circumstances surrounding the Qatari cash injection secured by Barclays, which is struggling to restore its reputation after a string of scandals.

Qatar Holding invested 5.3 billion pounds ($8 billion) in Barclays in June and October 2008, helping it avoid a government bailout and associated stringent re-payment terms and conditions imposed on bailed-out rivals Lloyds Banking Group and Royal Bank of Scotland.

"Barclays expects further developments in the near term," it said of the probe, as it announced a 5.8 billion pound rights issue to plug a capital reserve shortfall.

"Barclays is co-operating with all the authorities fully. It is not possible to estimate the financial impact upon Barclays should any adverse findings be made," it added.

It is unusual for details of regulatory investigations to be made public before any formal warning notice is issued.

But Barclays has been at pains to be fully transparent since becoming the first bank fined for its part in a global scam to manipulate Libor benchmark interest rates last year, which prompted a political furor so severe that its previous chief executive Bob Diamond and chairman Marcus Agius resigned.

ALL EYES ON BARCLAYS

Barclays has said the Financial Services Authority (FSA), the FCA's predecessor which launched the probe, had focused on the bank and four current and former senior employees, including finance director Chris Lucas.

Sources familiar with the investigation have said the regulator is also investigating Roger Jenkins, the main architect of the Qatar fundraising, who left Barclays in early 2009 and is now at Brazilian investment bank BTG Pactual.

The U.S. Department of Justice and the Securities and Exchange Commission have also waded in, opening an inquiry last October into whether Barclays' third-party relationships, which help it win and retain business, breach anti-bribery rules.

Barclays said on Tuesday the two U.S. authorities were also investigating the commercial agreements with Qatar, while the U.S. Federal Reserve is keen to be kept abreast of developments.

The SFO, which launched its own investigation last August, has said it anticipates progress in its own inquiry by year-end.

The deal with Qatar raised hackles from the outset. Shareholders were angry that Qatar Holding, which is now the bank's biggest shareholder with a 6.7 percent stake, was offered more attractive terms than existing investors.

Separately, Barclays said it would vigorously defend itself against fines worth around $470 million by the U.S. Federal Energy Regulatory Commission (FERC), which alleges the bank manipulated electricity markets in and around California from November 2006 to December 2008.

(Editing by Mark Potter)

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