Barclays, RBS raided by regulator over loan prices

Barclays Plc and Royal Bank of Scotland Group Plc were raided by the U.K. antitrust regulator as part of an investigation into the price of loans to professional services firms.

The offices of the two banks were visited 12 days ago, Corinne Gladstone, a spokeswoman from the Office of Fair Trading said in an interview today. Barclays said it approached the OFT with information about what it considered “inappropriate” contacts with one department in exchange for leniency.

“The investigation is operating within the confines of the Professional Services banking area and we believe that, if there is any issue, it starts and stops there,” Alistair Smith, a spokesman for London-based Barclays, said in an e-mailed statement today.

The issue is the second involving U.K. banks to come under OFT scrutiny in the last year. The regulator is challenging the overdraft fees of eight banks, including Barclays and RBS, in a High Court lawsuit.

“From both the European Commission and the U.K. regulators' point of view, the financial services sector has been like a Pandora's Box: they want to have a look, but they don't want to lift the lid,” said Mike Pullen, an antitrust lawyer at DLA Piper in London. “The OFT has been very clever here in going for a narrow focus: it makes it more manageable.”

RBS said in a statement that it is cooperating with the probe and declined to comment further.

Gladstone said that RBS and Barclays were the only banks targeted in raids, describing the investigation as "narrow."

“The OFT's investigation is at an early stage,” the London-based regulator said in a statement. “The OFT will not be in a position to conclude whether the law has in fact been infringed until it has completed its investigation and assessed the available evidence.”

(Published by Bloomberg - june 2, 2008)