Barclays ordered to pay €1.1qn compensation

Barclays bank may be in need of an overdraft after being ordered to pay €1.1qn in compensation to the former owner of a Spanish bank it acquired 25 years ago

The amount – €1.1 qaudrillion (1 followed by 15 zeros) – is the equivalent of 1,400 times Spain’s Gross Domestic Product, or the wealth Spaniards could generate in 1,000 years, triggering speculation that the figure may have been the result of a typographical error by the Madrid court.

A Spanish judicial oversight body said today it will investigate how such a gigantic figure was reached.

“It looks as if it’s a mistake, but we have no information yet,” said an official with the court watch agency, called the General Council of the Judiciary.

Barclays received the order yesterday from a Madrid court to pay the money to Domingo Lopez Alonso, the former owner of Banco de Valladolid.

The Spanish subsidiary of the British bank issued a statement arguing that the case dates back to before it took over the Banco de Valladolid in 1981 and, as such, it has nothing to do with Barclays.

Spain’s state-run Deposit Guarantee Fund, which took over the deeply troubled Valladolid bank in 1978 before Barclays moved in, issued a similar statement, insisting the “issue will not have any impact for Barclays” in Spain or the Barclays Group as a whole.

The fund said that after Barclays acquired the bank, the fund agreed to exempt Barclays from any legal proceedings brought by Lopez Alonso. Instead, the fund itself would bear the brunt of such action, the fund said.

The fund said it would seek clarification as to whether the amount demanded was genuine or a mistake.

A banking source said that the judge acted correctly in notifying Barclays but that it would be the fund which would take responsibility for any compensation payment to be made.

Lopez Alonso sold his majority share in Banco de Valladolid to the forerunner of the Deposit Guarantee Fund as part of a restructuring plan designed to bail the bank out. He sued for damages, complaining he was cheated.