New inquiry overshadows £4bn profit from troubled Barlcays

By MARTIN FLANAGAN
Published on 27/07/2012 22:17

BARCLAYS was rocked again yesterday as a bumper £4 billion interim profit was overshadowed by the disclosure that its finance director is among four current and former staff being investigated by the UK financial regulator.

The Financial Services Authority is probing if Barclays made adequate disclosure about the fees it paid under commercial arrangements related to its multi-billion pound Middle and Far East capital-raisings in 2008.

These brought the Qatar Investment Authority and the Qatari royal family on board as major new shareholders, with a combined 10 per cent stake, as well as the Japanese bank Sumitomo Mitsui Banking Corp (SMBC).

Marcus Agius, Barclays’ chairman, who is stepping down after ousted chief executive Bob Diamond is replaced, said the bank was not obliged to publish finance director Chris Lucas’s name while the FSA inquiry was continuing. But it had chosen to because of the potential “market sensitivity” of the issue, Agius said.

The chairman told a frequently fractious news conference yesterday that he understood the lack of clarity on the latest inquiry was “frustrating”, but later added: “Please can we stop it there, it’s enough.”

Agius said he was severely limited in what he could currently divulge. But it is thought the regulator may focus on a reference in the bank’s stock exchange announcement of the capital raising on 25 June 2008.

“Barclays is also pleased to have entered into an agreement for the provision of advisory services by Qatar Investment Authority to Barclays in the Middle East and to have agreed to explore opportunities for a co-operative business relationship with SMBC,” it said.

Analysts said it was unusual to pay monies for services to new investors taking positions in big financial institutions.

Yesterday’s new regulatory twist follows the ongoing probe into the Libor rate-fixing scandal that saw Diamond quit along with Barclays chief operating officer Jerry del Missier. It also came as the bank yesterday revealed it faced more US lawsuits related to Libor after its £290 million fine last month for rigging rates.

The bank also revealed it had to set aside £450m to compensate small businesses that were mis-sold interest-rate hedging products.

Agius, who confirmed that the bank’s priority was to recruit a chairman first as any potential new chief executive would need to know who is going to fill that post, again apologised for recent shocking events.

“We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” he said.

Analysts said the latest events overshadowed what the outgoing chairman called a resilient trading performance in tough economic conditions. Barclays’ underlying pre-tax profits, excluding exceptionals, rose 13 per cent to £4.2bn in the first six months of 2012 from £3.7bn.

Profits at the British high street and small business banking business lifted 6 per cent to £746m, with Barclaycard profits up nearly a third to £753m. Investment bank profits fell 2 per cent to £2.3bn. The interim dividend is to be held at 2p.