Barclays hit by fresh U.S. investigations
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Barclays hit by fresh U.S. investigations

www.reuters.com   | 31.10.2012.

LONDON (Reuters) - Barclays, already rocked by an interest rate rigging scandal, unveiled two new U.S. regulatory investigations into the bank's financial probity on Wednesday and said its profit was hit by charges for mis-selling insurance.
Barclays hit by fresh U.S. investigations

Following investigations in the UK over its dealings with Qatari investors, Barclays said the Department of Justice and Securities and Exchange Commission were investigating whether its relationships with third parties who help it win or retain business are compliant with the U.S. Foreign Corrupt Practices Act.

The bank is currently under investigation by Britain's financial regulator and fraud prosecutor into payments to Qatari investors after it raised billions of pounds from the Gulf state five years ago to save it from taking a taxpayer bailout.

The Financial Services Authority (FSA) is investigating the bank and four current and senior employees, including finance director Chris Lucas, to determine whether it made adequate disclosure of the fees it paid in a 2008 capital raising.

Barclays disclosed the FSA investigation when it released half-year results in July. The FSA investigation relates to fees paid to the Qatar Investment Authority on deals in June and November 2008, when Barclays raised 11.5 billion pounds ($18.5 billion).

Barclays declined to comment on whether the U.S. probe was linked to the same transactions.

Barclays also said on Wednesday that the U.S. Federal Energy Regulatory Commission was investigating whether it manipulated power prices in the western United States from late 2006 until 2008.

FERC could notify the bank of proposed penalties as early as Wednesday, it said. Barclays said it would "vigorously" defend this matter.

New Barclays Chief Executive Antony Jenkins, who took over at the end of July when his predecessor Bob Diamond quit after the bank admitted rigging Libor interest rates, is in the midst of a review aimed at changing its culture and boosting profitability, which is expected to cut jobs and the size of investment banking.

"While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned," Jenkins said.

CHARGES HIT PROFIT

The bank said its adjusted pretax profit in the three months to the end of September was 1.73 billion pounds, in line with analysts' forecasts and up from 1.34 billion a year ago.

But a 700 million pound charge for mis-selling payment protection insurance pulled pretax profit down 23 percent to 1.03 billion pounds, and a 1.1 billion pound loss on the value of its own debt dragged it to a loss of 47 million pounds for the quarter.

Investment bank income was 2.6 billion pounds in the quarter, up 17 percent on the same period the previous year, but down 13 percent on a strong performance in the second quarter.

The bank said performance during October had been affected by the "challenging economic environment and subdued market volumes".

Shares in Barclays were down 4.5 percent at 228.1 pence at 0854 GMT, lagging a flat performance by the European bank index.

"We were disappointed to find that total income in the Investment Bank fell short of market expectations, following a strong showing elsewhere in the industry," said Shore Capital analyst Gary Cooper.

($1 = 0.6218 British pounds)

(Additional reporting by Sarah White; Editing by Will Waterman)



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