A cautionary tale: how to fail to show accounts are GAAP-compliant

At the height of the 2008 financial crisis Barclays was ‘desperate’ to avoid a bail-out by the UK government and was seeking to shore up its Tier-One capital base by raising an additional £3bn. The bargain that was eventually struck with Qatari investors involved a subsidiary of Barclays PLC (‘Barclays’) BB PLC issuing RCIs which constituted loan relationships and Barclays issuing warrants over its own shares in return for £3bn in cash. BB PLC sought to claim debits under the loan relationship rules for £800m representing the difference (so BB PLC claimed) between the £2.2bn cash received by BB PLC from the investors for the RCIs and a £800 capital contribution received from Barclays in respect of the warrants which was treated as giving rise to an accruing discount...