Today, a former chairman of Barclays, stood as a witness at Southwark Crown Court in the historic trial of four senior bankers who were accused of fraud for their actions at the height of the 2008 financial crisis.
Agius is considered to be the first heavyweight banker to stand as a witness in a trial that is connected to the 2008 crash. It comes more than 11 years after the collapse of the housing market of the United States sent shockwaves through the financial system of the world.
Agius said that Barclays was not prepared for how hard the credit crunch would affect the financial sector.
He stated: “In June 2008 we at Barclays did not anticipate how much worse things were going to get.”
He added: “I don’t think we thought it was going to go as badly as it ultimately did.”
He continued: “The level of uncertainty generally in the market was intense. Companies had already failed. In this country, we all remember Northern Rock. In America, an investment bank called Bear Stearns had failed in the spring of 2008,” he told the jury.”
He noted: “It was an extremely uncertain febrile period.”
Agius is not accused of any wrongdoing. He was only appearing as the first witness at the trial of John Varley, a former chief executive of Barclays, and senior bankers Tom Kalaris, Roger Jenkins, and Richard Boath.
The Serious Fraud Office has accused the four, who since denied the charges, of covering up £322 million in fees that Barclays paid to Qatar during the course of two 2008 emergency fundraisings that raised approximately £12 billion for the bank.
Agius said that he was not aware of any extra fees paid to Qatar during the 2008 fundraisings.
He stated: “Paying commission to one set of underwriters and not others would’ve been unacceptable to the market.”
Initially, Barclays raised money from Qatar via a rights issue in June 2008 prior to the full scale of the crash became clear.
As the crisis deepened in October 2008, the government requested banks to dramatically increase their capital ratios, forcing Barclays to choose between privately raising funds and opting for a state bailout.
Agius said that the bank decided not to take state funds which, “to put it mildly was a big call,” it instead hoped that government action would stabilise the system, enabling the bank to raise money from the stock market.
However, when the brokers of Barclays sounded out underwriters, they received a negative response, resulting in the decision to return to the Qataris for further fundraising.
Varley and Jenkins deny two counts of fraud by false representation that is connected to two fundraisings in June and October 2008. While both Kalaris and Boath deny one count over the June fundraising. The trial is set to continue.