Barclays 2012 Annual Report Download - page 286

29 Legal Proceedings continued
Other
Barclays is engaged in various other legal proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United
States, involving claims by and against it which arise in the ordinary course of business, including debt collection, consumer claims and
contractual disputes. Barclays does not expect the ultimate resolution of any of these proceedings to which Barclays is party to have a material
adverse effect on its results of operations, cash flows or the financial position of the Group and Barclays has not disclosed the contingent liabilities
associated with these claims either because they cannot reliably be estimated or because such disclosure could be prejudicial to the conduct of
the claims. Provisions have been recognised for those cases where Barclays is able reliably to estimate the probable loss where the probable loss is
not de minimis.
30 Competition and regulatory matters
This note highlights some of the key competition and regulatory challenges facing Barclays, many of which are beyond our control. The extent of
the impact of these matters on Barclays and the impact on Barclays of any other competition and regulatory matters in which Barclays is or may in
the future become involved cannot always be predicted but may materially impact our businesses and earnings.
Regulatory change
There is continuing political and regulatory scrutiny of the banking industry which, in some cases, is leading to increased or changing regulation
which is likely to have a significant effect on the industry.
On 4 February 2013, the UK Government introduced the Financial Services (Banking Reform) Bill (the Bill) to the House of Commons. The Bill
would give the UK authorities the powers to implement the key recommendations of the Independent Commission on Banking by requiring,
amongst other things: (i) the separation of the UK and EEA retail banking activities of UK banks in a legally distinct, operationally separate and
economically independent entity (so called ‘ring fencing’) and (ii) the increase of the loss-absorbing capacity of ring-fenced banks and UK
headquartered global systemically important banks to levels higher than the Basel 3 guidelines. The Bill would also give depositors protected
under the Financial Services Compensation Scheme preference if a bank enters insolvency. At the same time, the Government announced that it
will be bringing forward amendments to the Bill to establish a reserve power allowing the regulator, with approval from the Government, to
enforce full separation under certain circumstances. The Government is expected to publish draft secondary legislation by late summer this year.
The UK Government intends that primary and secondary legislation will be in place by the end of this Parliament (May 2015) and that UK banks
will be required to be compliant by 1 January 2019.
The US Dodd-Frank Wall Street Reform and Consumer Protection Act contains far reaching regulatory reform, including potential reform of the
regulatory regime for foreign banks operating in the US which may, amongst other things, require the US subsidiaries of foreign banks to be held
under a US intermediate holding company subject to a comprehensive set of prudential and supervisory requirements in the US. The full impact
on Barclays businesses and markets will not be known until the principal implementing rules are adopted in final form by governmental
authorities, a process which is underway and which will take effect over several years.
Interchange
The Office of Fair Trading, as well as other competition authorities elsewhere in Europe, continues to investigate Visa and MasterCard credit and
debit interchange rates. These investigations may have an impact on the consumer credit industry as well as having the potential for the
imposition of fines. The timing of these cases is uncertain and it is not possible to provide an estimate of the potential financial impact of this
matter on Barclays.
London Interbank Offered Rate
The UK Financial Services Authority (the FSA), the US Commodity Futures Trading Commission (the CFTC), the US Securities and Exchange
Commission, the US Department of Justice Fraud Section (the DOJ-FS) and Antitrust Division, the European Commission, the UK Serious Fraud
Office and various US state attorneys general are amongst various authorities conducting investigations (the Investigations) into submissions
made by Barclays and other panel members to the bodies that set various interbank offered rates, such as the London Interbank Offered Rate
(LIBOR) and the Euro Interbank Offered Rate (EURIBOR).
On 27 June 2012, Barclays announced that it had reached settlements with the FSA, the CFTC and the DOJ-FS in relation to their Investigations and
Barclays had agreed to pay total penalties of £290m (Pounds Sterling equivalent), which have been reflected in operating expenses for 2012. The
settlements were made by entry into a Settlement Agreement with the FSA, a Non-Prosecution Agreement (NPA) with the DOJ-FS and a
Settlement Order Agreement with the CFTC. In addition, Barclays has been granted conditional leniency from the Antitrust Division of the
Department of Justice in connection with potential US antitrust law violations with respect to financial instruments that reference EURIBOR.
The terms of the Settlement Agreement with the FSA are confidential. However, the Final Notice of the FSA, which imposed a financial penalty of
£59.5m, is publicly available on the website of the FSA. This sets out the FSA’s reasoning for the penalty, references the settlement principles and
sets out the factual context and justification for the terms imposed. Summaries of the NPA and the CFTC Order are set out below. The full text of
the NPA and the CFTC Order are publicly available on the websites of the DOJ and the CFTC, respectively.
barclays.com/annualreport284 I Barclays PLC Annual Report 2012
Notes to the financial statements
For the year ended 31 December 2012 continued