The story
1690 to 1900
Barclays traces its origins back to 17 November 1690, when two Quakers, John Freame and Thomas Gould, started trading as goldsmith bankers in Lombard Street, London. The name "Barclays" became associated with the business in 1736, when Freame's son-in-law James Barclay became a partner. In 1728, the bank moved to 54 Lombard Street, identified by the "Sign of the Black Spread Eagle", which in subsequent years would become a core part of the bank's visual identity.
The Barclay family were connected with slavery, both as proponents and opponents. David and Alexander Barclay were engaged in the slave trade in 1756. David Barclay of Youngsbury (1729–1809), on the other hand, was a noted abolitionist, and Verene Shepherd, the Jamaican historian of diaspora studies, states that he chose to free his slaves in that colony.
In 1776, the firm was styled "Barclay, Bevan and Bening" and remained so until 1785, when another partner, John Tritton, who had married a Barclay, was admitted, and the business then became "Barclay, Bevan, Bening and Tritton". In 1896, twelve houses in London and the English provinces, notably Goslings and Sharpe, Backhouse's Bank of Darlington and Gurney's Bank of Norwich (the latter two of which also had their roots in Quaker families), united to form Barclays and Co., a joint-stock bank, which at its formation held around one quarter of deposits in English private banks.
1900 to 1945
Between 1905 and 1916, Barclays extended its branch network by making acquisitions of small English banks. Further expansion followed in 1918 when Barclays amalgamated with the London, Provincial and South Western Bank, and in 1919, when the British Linen Bank was acquired by Barclays, although the British Linen Bank retained a separate board of directors and continued to issue its own banknotes (see Banknotes of the pound sterling).
In 1925, the Colonial Bank, National Bank of South Africa and the Anglo-Egyptian Bank were amalgamated and Barclays operated its overseas operations under the name Barclays Bank (Dominion, Colonial and Overseas)—Barclays DCO. In 1938, Barclays acquired the first Indian exchange bank, the Central Exchange Bank of India, which had opened in London in 1936 with the sponsorship of the Central Bank of India.
In 1941, during the German occupation of France, a branch of Barclays in Paris, headed by Marcel Cheradame, worked directly with the invading force. Senior officials at the bank volunteered the names of Jewish employees, as well as ceding an estimated one hundred Jewish bank accounts to the German occupiers. The Paris branch used its funds to increase the operational power of a large quarry that helped produce steel for the Germans. There was no evidence of contact between the head office in London and the branch in Paris during the occupation. Marcel Cheradame was kept as the branch manager until he retired in the sixties.
1946 to 1980
In May 1958, Barclays was the first UK bank to appoint a female bank manager. Hilda Harding managed Barclays' Hanover Square branch in London until her retirement in 1970.
In 1965, Barclays established a US affiliate, Barclays Bank of California, in San Francisco.
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Barclays launched the first credit card in the UK, Barclaycard, in 1966. On 27 June 1967, Barclays deployed the world's first cash machine, in Enfield; Barclays Bank, Enfield. The British actor Reg Varney was the first person to use the machine.
In 1969, a planned merger with Martins Bank and Lloyds Bank was blocked by the Monopolies and Mergers Commission, but the acquisition of Martins Bank on its own was later permitted. Also that year, the British Linen Bank subsidiary was sold to the Bank of Scotland in exchange for a 25% stake, a transaction that became effective from 1971. Barclays DCO changed its name to Barclays Bank International in 1971.
From 1972 until 1980, a minority stake in Banca Barclays Castellini SpA, Milan was owned by the Castellini family. In 1980, Barclays Bank International acquired the remaining stake in Barclays Castellini from the Castellini family.
In August 1975, following the secondary banking crash, Barclays acquired Mercantile Credit Company.
1980 to 2000
Barclays Bank International expanded its business in 1980 to include commercial credit and took over American Credit Corporation, renaming it Barclays American Corporation.
During 1985 Barclays Bank and Barclays Bank International merged, and as part of the corporate reorganisation the former Barclays Bank plc became a group holding company, renamed Barclays Group Plc, and UK retail banking was integrated under the former BBI, and renamed Barclays Bank PLC from Barclays Bank Limited.
In response to the Big Bang on the London Stock Exchange, in 1986 Barclays bought UK stockbroker de Zoete & Bevan and jobbing firm Wedd Durlacher (formerly Wedd Jefferson). They were merged with Barclays Merchant Bank to form Barclays de Zoete Wedd (BZW). Also that year Barclays sold its South African business operating under the Barclays National Bank name after protests against Barclays' involvement in South Africa and its apartheid government.
Barclays introduced the Connect card in June 1987, the first debit card in the United Kingdom.
In 1988, Barclays sold Barclays Bank of California, which at that time was the 17th-largest bank in California measured by assets, to Wells Fargo for US$125 million in cash.
Edgar Pearce, the "Mardi Gra Bomber", began a terror campaign against the bank and the supermarket chain Sainsbury's in 1994.
Barclays bought Wells Fargo Nikko Investment Advisors (WFNIA) in 1996 and merged it with BZW Investment Management to form Barclays Global Investors. Bob Diamond took charge of the investment banking businesses that year. 80% of Barclays's revenue came from UK retail and commercial banking at that time; Diamond's goal was to compete with US bulge-bracket investment banks, and the firm allowed him to do so despite Diamond's division losing hundreds of millions of pounds in the 1998 Russian financial crisis.
Two years later, in 1998, the BZW business was broken up and the Equity and Corporate Finance divisions were sold to Credit Suisse First Boston: Barclays retained the debt-focused Fixed Income business and Structured Capital Markets which formed the foundation of the rebranded Barclays Capital (BarCap). Barclays Capital had offices in over 29 countries and employed over 20,000 people, with over 7,000 people working in its IT division.
In 1998, Barclays Bank agreed to pay $3.6m to Jews whose assets were seized from French branches of the British-based bank during World War II. Barclays, along with seven French banks, was named in a lawsuit filed in New York on behalf of Jews who were unable to reclaim money they deposited during the Nazi era.
In an unusual move as part of the trend at the time for free ISPs, Barclays launched an Internet service provider in 1999 called Barclays.net. This entity was acquired by British Telecom in 2001.
In the 1990s, Barclays helped to fund President Robert Mugabe's government in Zimbabwe. The most controversial of a set of loans provided by Barclays was the £30 million it gave to help sustain land reforms that saw Mugabe seize white-owned farmland and drive more than 100,000 black workers from their homes. Opponents have called the bank's involvement a "disgrace" and an "insult" to the millions who have suffered human rights abuses. A Barclays spokesman said the bank has had customers in Zimbabwe for decades and abandoning them now would make matters worse, "We are committed to continuing to provide a service to those customers in what is clearly a difficult operating environment". Barclays also provided bank accounts to two of Mugabe's associates, who were subject to European Union sanctions on Zimbabwe. The men are Elliot Manyika and minister of public service Nicholas Goche. Barclays has defended its position by insisting that the EU rules do not apply to its 67%-owned Zimbabwean subsidiary because it was incorporated outside the EU.
2000 to 2010
In August 2000, Barclays took over the recently de-mutualised Woolwich Building Society, in a £5.4 billion acquisition. Woolwich thus joined the Barclays group of companies, and the Woolwich name was retained after the acquisition. The company's head office remained in Bexleyheath, south-east London, four miles (6 km) from the original head office in Woolwich.
Barclays closed 171 branches in the UK in 2001, many of them in rural communities: Barclays called itself "The Big Bank", but this name was quickly given a low profile after a series of embarrassing PR stunts.
On 31 October 2001, Barclays and CIBC agreed to combine their Caribbean operations to establish a joint venture company known as FirstCaribbean International Bank (FCIB).
In 2003, Barclays bought the American credit card company Juniper Bank from CIBC, re-branding it as "Barclays Bank Delaware". The same year saw the acquisition of Banco Zaragozano, the 11th-largest Spanish bank.
In May 2005, Barclays moved its group headquarters from Lombard Street in the City of London to One Churchill Place in Canary Wharf. Also in 2005 Barclays sealed a £2.6bn takeover of Absa Group Limited, South Africa's largest retail bank, acquiring a 54% stake on 27 July 2005.
In 2006, Barclays purchased the HomEq Servicing Corporation for US$469 million in cash from Wachovia Corp. That year also saw the acquisition of the financial website CompareTheLoan and Barclays announcing plans to rebrand Woolwich branches as Barclays, migrating Woolwich customers onto Barclays accounts and migrating back-office processes onto Barclays systems—the Woolwich brand was to be used for Barclays mortgages. Barclays also exited retail-banking operations in the Caribbean-region which extended as far back as 1837 through selling of its joint venture stake in FirstCaribbean International Bank (FCIB) to CIBC for between $989 million and $1.08 billion.
In March 2007, Barclays announced plans to purchase ABN AMRO, the largest bank in the Netherlands. However, on 5 October 2007 Barclays announced that it had abandoned its bid, citing inadequate support by ABN shareholders. Fewer than 80% of shares had been tendered to Barclays' cash-and-shares offer. This left the consortium led by Royal Bank of Scotland Group free to proceed with its counter-bid for ABN AMRO.
Also in 2007, Barclays agreed to purchase Equifirst Corporation from Regions Financial Corporation for US$225 million. That year also saw Barclays Personal Investment Management announcing the closure of their operation in Peterborough and its re-siting to Glasgow, laying off nearly 900 members of staff.
On 30 August 2007, Barclays borrowed £1.6 billion (US$3.2 billion) from the Bank of England sterling standby facility. Despite rumours about liquidity at Barclays, the loan was necessary due to a technical problem with their computerised settlement network. A Barclays spokesman was quoted as saying "There are no liquidity issues in the U.K markets. Barclays itself is flush with liquidity."
On 9 November 2007, Barclays shares dropped 9% and were even temporarily suspended for a short period of time, due to rumours of a £4.8 billion (US$10 billion) exposure to bad debts in the US. However, a Barclays spokesman denied the rumours.
In February 2008, Barclays bought the credit card brand Goldfish for US$70 million gaining 1.7 million customers, and US$3.9 billion in receivables. Barclays also bought a controlling stake in the Russian retail bank Expobank for US$745 million. Later in the year Barclays commenced its Pakistan operations with initial funding of US$100 million.
During the 2008 financial crisis, Barclays sought to raise capital privately, avoiding direct equity investment from the UK government, which was offered to boost its capital ratio. Barclays believed that "maintaining its independence from government was in the best interests of its shareholders".
In July 2008, Barclays raised £4.5 billion through a rights issue to shore up its Tier 1 capital ratio, which involved a rights offer to existing shareholders and the sale of a stake to Sumitomo Mitsui Banking Corporation. Only 19% of shareholders took up their rights leaving investors China Development Bank and Qatar Investment Authority with increased holdings in the bank.
Reuters reported in October 2008 that the British government would inject £40 billion (US$69 billion) into three banks including Barclays, which might seek over £7 billion. Barclays later confirmed that it rejected the Government's offer and would instead raise £6.5 billion of new capital (£2 billion by cancellation of dividend and £4.5 billion from private investors).
On 12 June 2009, Barclays sold its Global Investors unit, which included its exchange-traded fund business, iShares, to BlackRock for US$13.5 billion. Standard Life sold Standard Life Bank to Barclays in October 2009. The sale was completed on 1 January 2010. Barclays sold its Retail Banking unit in Spain to CaixaBank in 2014. With the sale, Caixabank acquired around 550,000 new retail and private banking clients and 2,400 employees.
In March 2009, Barclays was accused of violating international anti-money laundering laws. According to the NGO Global Witness, the Paris branch of Barclays held the account of Equatorial Guinean President Teodoro Obiang's son, Teodorin Obiang, even after evidence that Obiang had siphoned oil revenues from government funds emerged in 2004. According to Global Witness, Obiang purchased a Ferrari and maintains a mansion in Malibu with the funds from this account.
In March 2009, Barclays obtained an injunction against The Guardian requiring it to remove from its website confidential leaked documents describing how SCM, Barclays' structured capital markets division, planned to use more than £11 billion of loans to create hundreds of millions of pounds of tax benefits, via "an elaborate circuit of Cayman Islands companies, US partnerships and Luxembourg subsidiaries". In an editorial on the issue, The Guardian pointed out that, due to the mismatch of resources, tax-collectors (HMRC) now have to rely on websites such as WikiLeaks to obtain such documents. Separately, another Barclays whistleblower revealed several days later that the SCM transactions had produced between £900 million and £1 billion in tax avoidance in one year, adding that "The deals start with tax and then commercial purpose is added to them."
A 2010 report by The Wall Street Journal described how Credit Suisse, Barclays, Lloyds Banking Group, and other banks were involved in helping the Alavi Foundation, Bank Melli, the Iranian government, and/or others circumvent US laws banning financial transactions with certain states. They did this by "stripping" information out of wire transfers, thereby concealing the source of funds. Barclays settled with the government for US$298 million.
In February 2012, Barclays was ordered by the Treasury to pay £500 million in tax which it had tried to avoid. Barclays was accused by HMRC of designing two schemes that were intended to avoid substantial amounts of tax. Tax rules had required the bank to tell the UK authorities about its plans.
In October 2012 Barclays announced it had agreed to buy the ING Direct UK business of the ING Group. The transfer of the business to Barclays was approved at the High Court on 20 February 2013 and ING Direct was renamed Barclays Direct and would be integrated into the existing Barclays business within two years.
"Double Dip" tax scams
On 30 June 2006, The Wall Street Journal ran a front page, column one, article detailing how Barclays Capital was making a giant portion of its income not through legitimate investment banking activities but through a tax dodge. The so-called "double dip" was a highly lucrative, cross-border tax avoidance strategy that exploited differences in how the UK and US tax systems treated specific investments, allowing Barclays and its American partner banks to both claim the same tax credits for a single income tax payment. In a "Double Dip", Barclays and an American bank would loan, for example, an airline funds for the purchase of a jumbo jet. A subsidiary without any employees would be set up owned by Barclays and the American bank to handle the transaction, and the subsidiary would pay tax on the income on the loan in Britain. Both Barclays and its American partner banks would then claim the same full tax credit amount with their respective national tax authorities, resulting in Barclays' avoiding paying any income tax on the transaction without the respective tax authorities recognizing the "double dip". Barclays was making over £1 billion a year from the practice. This practice ended after The Wall Street Journal published an exposé of the scam in a front page, column one, article on 30 June 2006 by Carrick Mollenkamp, which ensured that Parliament, the Bank of England, and the UK Inland Revenue and the American Internal Revenue Service would learn of it. The practice was subsequently outlawed, resulting in Bob Diamond being branded "the unacceptable face of banking" by Peter Mandelson, UK Business Secretary
Lehman Brothers acquisition
On 16 September 2008, Barclays announced its agreement to purchase, subject to regulatory approval, the investment-banking and trading divisions of Lehman Brothers (including its former headquarters at 745 Seventh Avenue). Bob Diamond led the effort, securing Barclays a presence in U.S. Equities and Investment Banking. With Lehman, he and Barclays would achieve their goal of joining the bulge bracket.
On 20 September 2008, a revised version of the deal, a US$1.35 billion (£700 million) plan for Barclays to acquire the core business of Lehman Brothers (mainly Lehman's US$960 million Midtown Manhattan office skyscraper, with responsibility for 9,000 former employees), was approved. After a seven-hour hearing, New York bankruptcy court Judge James Peck ruled:
I have to approve this transaction because it is the only available transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets. This is the most momentous bankruptcy hearing I've ever sat through. It can never be deemed precedent for future cases. It's hard for me to imagine a similar emergency.
In the amended agreement, Barclays would absorb US$47.4 billion in securities and assume US$45.5 billion in trading liabilities. Lehman's attorney Harvey R. Miller of Weil, Gotshal & Manges, said "the purchase price for the real estate components of the deal would be US$1.29 billion, including US$960 million for Lehman's New York headquarters and US$330 million for two New Jersey data centres. Lehman's original estimate valued its headquarters at US$1.02 billion but an appraisal from CB Richard Ellis this week valued it at US$900 million." Further, Barclays will not acquire Lehman's Eagle Energy unit, but will have entities known as Lehman Brothers Canada Inc, Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment Management business for high-net-worth individuals. Finally, Lehman will retain US$20 billion of securities assets in Lehman Brothers Inc that are not being transferred to Barclays. Barclays had a potential liability of US$2.5 billion to be paid as severance, if it chooses not to retain some Lehman employees beyond the guaranteed 90 days. The job of integration was given to Barclays' Rich Ricci.
In September 2014, Barclays was ordered to pay $15 million in settlement charges that alleged the bank had failed to maintain an adequate internal compliance system after its acquisition of Lehman Brothers during the 2008 financial crisis.
From Wikipedia’s article on Barclays, shared under CC BY-SA 4.0.8