Barclays Bosses Use Rival Banks for Mortgages

Red-faced Barclays officials yesterday confirmed that the bank’s chief executive took out a home loan last year from rival bank HSBC.

Chief executive John Varley – who earned £2.9m from the bank in 2005 – took out a loan on his £1.5m London home last year, ironically, a few months before he announced his disappointment at Barclays mortgage lending figures.

When Mr Varley took out the mortgage, HSBC’s standard rate was 5.5 per cent, more than a percentage point lower than the standard rate at Barclays. The bank’s finance director and deputy chairman have also taken out mortgages with other lenders.

Mr Varley revealed in February that Barclays had enjoyed bumper profits, although this news failed to cover up the poor showing by Woolwich, the mortgage lender it bought in 2000 for £5.4bn. The former building society actually saw its 6 per cent market share fall by 3 per cent despite the mortgage market enjoying a growth of 10 per cent. At the time Mr Varley said: “ We’re a big player in the UK mortgage market but our share of flow in 2005 was disappointing. I want to put that right in 2006.”

However, the news that he borrowed from rivals HSBC is extremely embarrassing for his own bank and is also unlikely to instil confidence in existing and future customers. Recently HSBC has adopted an aggressive pricing policy that has seen them undercut their rivals. Some of these rivals hit out at HSBC, saying the cuts were unsustainable.

A spokesman for Barclays explained that one of the reasons that senior bosses ideally would prefer to take out mortgages from the bank but in doing so disclose too much private, personal information. Currently, directors who take out loans from the bank have to disclose them in the annual report and to fellow directors.

The news comes at a time when the bank was forced into apologising last week to a teenager who suffers from Down’s syndrome, after refusing her an account on the basis that she was “mentally incompetent.”

Barclays also suffered embarrassment in 2003 when chairman Matthew Barrett was criticised for saying he wouldn’t by credit card, as it was too expensive.