Fast Five Friday: Why Barclays' "independence" became their most expensive mistake

Hi,

Welcome to Bankrolling Tomorrow, your no BS guide to capital raising.

Christmas is officially here, and honestly, I'm loving the festive energy everywhere. The office is buzzing with holiday spirit, and we've got our Christmas party today - very excited to celebrate with the whole team.

But since it's the season of giving, I'm not going to ramble on about my holiday plans. Instead, I'm giving you something better - lessons from one of the most expensive mistakes in banking history (knowledge is the best gift ever).

This week I broke down Barclays' notorious £11.8B raise from 2008 - right when the financial crisis was destroying banks left and right. While their competitors like RBS and Lloyds were lining up for government bailouts, Barclays refused. They didn't want the government controlling their business, so they went to Qatar and Abu Dhabi for private money instead. Smart move, right? 

Well... they got the money, avoided the bailout, but paid Qatar secret fees they hid from everyone else. Sixteen years later, that little cover-up cost them a £40M fine.

Ouch. 

But that’s what makes it a good capital raise story. Because you don’t just learn from successful raises. You also learn from unsuccessful raises. If anything, failure teaches you more. A lot more. And Barclays? They made some classic mistakes that every business should avoid.

So here are Barclays' biggest mistakes (and how to avoid making them yourself):

1/ Don't hide the real cost from your investors
Barclays paid Qatar way above market rates - that's fine, desperate times call for expensive money. But then they buried £322M of those fees in "advisory agreements" instead of being upfront about it. Sixteen years later, that secrecy cost them £40M in fines. If you're paying a premium, just say so. Investors hate surprises more than high fees.

2/ Independence isn't free - know what you're actually paying
Barclays thought avoiding government money meant staying independent. But Qatar didn't hand over billions out of kindness - they wanted influence, better terms, and leverage. Before you take "strategic" money, ask yourself: what does this investor really want beyond returns? Price the control, not just the cash.

3/ Urgency clouds your judgement
When Lehman collapsed, Barclays needed money fast. That panic led to deals they couldn't defend later. I get it - when you're desperate, you take what you can get. But the decisions you make under pressure are the ones that haunt you for years. Take a breath, even when the clock is ticking.

4/ Your reputation is your most expensive asset
Barclays spent sixteen years dealing with investigations and angry shareholders because of one hidden deal. The banks that took government bailouts? They got their public beating and moved on. Sometimes the "clean" option costs more in the long run. Protect your reputation like it pays your bills - because it does.

5/ Transparency today saves you pain tomorrow
Every sketchy deal eventually comes to light. Barclays thought they could tuck away £322M where nobody would look. Spoiler alert: regulators always look. If you'd be embarrassed explaining a deal term out loud, don't sign it. The short-term convenience isn't worth the long-term headache.

Bottom line: you can survive a crisis without creating a bigger one later. You just need to make the right choices.

Thanks for allowing me into your inbox every week.

If you have any questions, or want to discuss any of my rants on these topics in depth, reply to this email, and I will get back to you ASAP.

Talk soon,

James