Barclays is facing a potential £37.8 million payout to creditors for providing banking services to a company alleged to have operated a £90 million Ponzi scheme.

Denaro, a Liverpool-based business, took money from retail investors on the promise of providing them with three per cent returns. This was then allegedly re-invested into other speculative investment schemes, with payouts to initial investors covered by funds from new investors.

Barclays provided the firm with banking services and is now facing a legal claim over lost funds which could amount to as much as £37.8 million.

Denaro operated from 2013 and closed to new investors in 2019, but was only ordered to shut last year, in that time racking up £90 million in creditors' claims. It was described as a "Ponzi scheme" by lawyers acting on behalf of the restructuring and liquidations firm Begbies Traynor.

The lawyers alleged that Denaro's owners transferred funds between their Barclays company account and a Barclays partnership account.

"The Ponzi scheme could not have been operated but for the banking facilities provided by Barclays," the lawyers stated in court, as reported by CityAM.

Last week, a judge ruled that the case can go to trial, ending an attempt by Barclays to strike out the claims.

The prosecution has accused a Barclays relationship manager of overlooking millions of pounds in transfers between Denaro's Barclays accounts, arguing that in doing so this individual "dishonestly assisted the directors in their alleged breaches of fiduciary duty".

Barclays's lawyers have made the counterargument that the individual in question did not work to hide the company from regulatory inspection.

Barclays declined to comment.

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