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Barclays says subject of new regulatory probes | |
(about 1 hour later) | |
UK bank Barclays has announced that it is the subject of two new regulatory probes, soon after a series of scandals that have dented its reputation. | |
US authorities are looking at whether the way that Barclays won business complied with the Foreign Corrupt Practices Act. | |
The bank disclosed the probes as it reported a pre-tax statutory loss of £47m for the third quarter, down from a £2.4bn profit last year. | |
Shares in the bank fell 4%. | |
The loss includes charges to cover the payment protection insurance (PPI) mis-selling scandal. | |
"The spectre of more damage to the bank's reputation in the form of further regulatory probes is weighing heavily on the shares in early trade," said Richard Hunter, head of equities at Hargreaves Lansdown. | |
"Barclays' outlook statement is also cautious, whilst the previously announced extra PPI provision has dented the overall performance. On the upside, the bank has seen a reduction in impairments and costs, has further bolstered its capital position and has reduced its exposure to the weak peripheral European markets." | |
Scandals | |
The US Department of Justice and the Securities and Exchange Commission are looking into how Barclays won its business, while the second probe is by the US Federal Energy Regulatory Commission, which has been investigating Barclays power trading in the western US with respect to the period from late 2006 through 2008. | |
"Barclays intends to vigorously defend this matter," the bank said. | |
Barclays' adjusted profits, not including additional charges, were £1.7bn, up from £1.3bn for the quarter last year. | Barclays' adjusted profits, not including additional charges, were £1.7bn, up from £1.3bn for the quarter last year. |
The bank said it needed to set aside a further £700m for PPI claims, on top of £1bn in 2011 and £300m in the first quarter of this year that it anticipated. | The bank said it needed to set aside a further £700m for PPI claims, on top of £1bn in 2011 and £300m in the first quarter of this year that it anticipated. |
Chief executive Antony Jenkins said the results show "good momentum in our businesses despite the difficulties we faced through this period". | Chief executive Antony Jenkins said the results show "good momentum in our businesses despite the difficulties we faced through this period". |
Mr Jenkins took over at a difficult time for the banking group, which has seen its reputation severely dented. In June, Barclays was fined £290m by UK and US regulators for attempting to manipulate Libor, an interbank lending rate which affects mortgages and loans. | Mr Jenkins took over at a difficult time for the banking group, which has seen its reputation severely dented. In June, Barclays was fined £290m by UK and US regulators for attempting to manipulate Libor, an interbank lending rate which affects mortgages and loans. |
The scandal saw previous boss Bob Diamond and chairman Marcus Agius depart the bank. | The scandal saw previous boss Bob Diamond and chairman Marcus Agius depart the bank. |
And in August, the Serious Fraud Office started an investigation into payments between Barclays' bank and Qatar Holding in 2008 when the bank was raising money in the Middle East during the banking crisis. | |
The entire financial services industry has come under scrutiny since the financial crisis in 2008. | The entire financial services industry has come under scrutiny since the financial crisis in 2008. |
The industry's reputation has been battered further by the mis-selling of PPI, and the mis-selling of specialist insurance - called interest rate swaps - to small businesses. | The industry's reputation has been battered further by the mis-selling of PPI, and the mis-selling of specialist insurance - called interest rate swaps - to small businesses. |
In the third quarter, Barclays said its staff costs fell 9% to almost £2bn, including an increase in deferred charges for bonuses in previous years to £942m. | In the third quarter, Barclays said its staff costs fell 9% to almost £2bn, including an increase in deferred charges for bonuses in previous years to £942m. |