Barclays struggles to escape Diamond's shadow
Two fresh inquiries into conduct are set to spark further fines, while third-quarter profits have been knocked by PPI mis-selling charge
Barclays has been rocked by two fresh inquiries into its conduct, leaving the bank facing millions of pounds in new fines.
The company, which has already been fined £290m this year for Libor rigging, said another fine could come as early as today from the US Federal Energy Commission, which has been investigating its western US power trading operations between 2006 and 2008.
Barclays said it would defend itself against any penalty "vigorously".
It also revealed that the investigation into money it paid to advisers to the Qatar sovereign wealth fund, when it raised extra capital in 2008, had widened.
This was already under investigation in London by the Serious Fraud Office and Financial Services Authority, and is now being looked at by the US Department of Justice and the Securities and Exchange Commission.
News of the investigations were revealed alongside the company's third-quarter results, where underlying profits rose from £1.34bn to £1.73bn in the three months to the end of September. That was before the extra £700m charge for mis-selling payment protection insurance announced only last week and a £1bn esoteric accounting charge for the change in value of the bank's own bonds. At the statutory level the bank lost £47m.
The investment bank, which Barclays' former chief executive Bob Diamond created, continues to be a star performer, with pre-tax profits more than double a year earlier at £937m.
Barclays' shares closed 11.3p, or nearly 5 per cent, lower at 227.5p with analysts saying that while the figures were in line with forecasts the new inquiries and cautious outlook weighed on investor sentiment.
The new chief executive Antony Jenkins admitted the third quarter had been difficult for the bank with the departure of his predecessor Mr Diamond over the Libor-rigging scandal and the exit of chairman Marcus Agius, who will be replaced by Sir David Walker today.
Earlier this week, a High Court judge said that Barclays would be forced to disclose the names of staff involved in Libor rigging.
The ruling was part of a case brought by Guardian Care Homes, which is suing Barclays for almost £40m over the alleged mis-selling of complex interest-rate swaps.
"While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned," Mr Jenkins said. "These numbers show continued momentum, despite significant headwinds. They demonstrate that we have remained proactive, for example in taking action to cut costs."
Mr Jenkins said he would reveal his strategy for the bank in February but for now he was looking at every part of the business to assess how well they would perform when the tighter Basel III regulations came into force. He said that he would sort the businesses into three categories: those which would continue to grow and be successful, those which needed modifying and those the bank should exit.
But following UBS's decision to quit fixed income yesterday Mr Jenkins said his investment bank was "certain to remain a very significant player" in that market.
Barclays also raised the prospect that it could sell bonds that convert into equity if its capital levels fell to dangerous levels.
Scandals and investigations: Heat is on bank
Barclays was fined a record £290m in June for manipulating the interbank lending rate, Libor, between 2005 and 2009. The scandal cost chief executive Bob Diamond and chairman Marcus Agius their jobs.
Less than a month later, Barclays revealed it was being investigated by the Financial Services Authority over fees paid to Middle Eastern investors at the height of the financial crisis when it raised extra capital. This is being looked at by the United States Department of Justice and the Securities and Exchange Commission.
Barclays is facing an inquiry by the US Federal Energy Commission for allegedly manipulating energy prices in the US from 2006 until 2008.
Interest rate swaps and PPI
Earlier this month, Barclays set aside another £700m to cover the cost of mis-selling payment protection insurance, taking its bill to £2bn. It is also being sued by Guardian Care Homes for almost £40m over the alleged mis-selling of complex interest rate swaps.
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