Forex rigging bill surges by extra £800m at Barclays

AN UNEXPECTEDLY chunky £800 million provision at Barclays to cover potential settlements for alleged forex-rigging took the gloss off a 9 per cent rise in the bank’s underlying profits yesterday.

Barclays has now set aside a total of 2.05bn to cover potential settlements for alleged forex-rigging. Picture: Getty
Barclays has now set aside a total of 2.05bn to cover potential settlements for alleged forex-rigging. Picture: Getty

The latest anticipatory financial hit on the forex misconduct took the amount Barclays has earmarked for the issue to £2.05 billion. The group said it reflected “developments with certain authorities” since March when it reported its results for 2014.

Barclays’ latest provision on the issue meant its statutory pre-tax profits fell 26 per cent to £1.3bn in the first three months of 2015, it revealed.

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Excluding the hit, underlying profits climbed 9 per cent to £1.85bn. Barclays pulled out of a £2.6bn global forex manipulation settlement between the US and British authorities and six rival banks last November, saying it had not reached a deal with the New York regulator.

Barclays said at the time it wanted to settle the allegations with as many agencies as possible simultaneously. New York’s banking regulator said yesterday it could reach a deal with the bank next month if it excluded an investigation of the possible rigging of forex rates through computer programs.

But it said it could take several more months if that trading was included in any settlement. Antony Jenkins, group chief executive of the bank, said: “Resolving legacy conduct issues is an important part of our plan to transform Barclays. We are working hard to expedite their settlement and have taken further provisions of £800m this quarter. While we still have much to do, I am pleased with how we’ve begun 2015.”

He said the business was now “starting to realise its potential”.

The bank also set aside another £150 million for compensating customers mis-sold insurance products in Britain.

That scandal has now cost Barclays £5.4bn and the British banking sector £26bn.

BarCap, the group’s investment bank, had a good quarter, with a 37 per cent surge in profits to £675m, the biggest improvement of any of the group’s divisions, even though its revenues only grew 2 per cent.

Separately, TSB, which was part-divested by owner Lloyds in a stock market flotation last summer, saw its pre-tax profits in Q1 slump 67 per cent to £34.3m compared with the same quarter of last year.

Profits for the first three months of 2015 surged 153 per cent to £34.2m from £13.5m in the last three months of 2014.

TSB said the year-on-year fall largely reflected higher costs, with operating expenses up as the group developed its infrastructure after its spin-off.

The bank, subject of an agreed takeover bid by Spanish bank Sabadell, attracted a near-8 per cent share of all new and switching bank accounts in Q1.

TSB has increased the number of current account customers by more than 300,000 since January 2014.