Barclays takes another £800m hit to provide for forex fines

The bank majority would be used to cover a huge penalty for the part its traders played in a City-wide conspiracy to rig foreign exchange rates

Anthony Jenkins said the results “further demonstrate that the ‘Transform’ strategy is working (Getty Images)

Barclays shares fell after it unveiled a nearly £1bn increase in provisions to cover it against various misdeeds.

The bank said the vast majority – some £800m – would “predominantly” be used to cover a huge impending penalty to settle the part its traders played in a City-wide conspiracy to rig foreign exchange rates.

Despite the escalating cost of that issue – total provisions now stand at £2bn – Tushar Morzaria, the finance director, insisted the bank had “no regrets” over its refusal to take part in a mass settlement of the allegations at the end of last year. That involved six banks – including Royal Bank of Scotland and HSBC – paying a combined £2.6bn in fines. They also had to accept blistering criticisms from regulators, who attacked them for presiding over a “free-for-all” culture.

Mr Morzaria declined to give any details of which regulators the bank is talking to over the affair. He was only prepared to echo the words of Antony Jenkins, the chief executive, who said: “Resolving legacy conduct issues is an important part of our plan… We are working hard to expedite their settlement.”

At the very least not taking part in the settlement means the bank will not quality for the highest level of discount on any fine available from the Financial Conduct Authority. But Mr Morzaria said: “We have no regrets for the actions we took last year.”

The remaining part of the enormous provision – £150m – was tagged for payment protection insurance mis-selling. It took the gloss off the bank’s results and was a big contributor to a 26 per cent tumble in pre tax profits to £1.3bn.

The bank sought to draw attention to its “underlying” profits which it said increased by 9 per cent to £1.85bn, with Barclays’ investment bank – responsible for many of its regulatory woes – increasing earnings by more than a third to £675m. Mr Jenkins said the results “further demonstrate that the ‘Transform’ strategy is working … the business is starting to realise its potential”. But reaction in the City was mixed. The shares closed 3.74p lower at 257.66p.

While there has been some optimism surrounding Barclays in the wake of its luring Australian John McFarlane as chairman away from insurer Aviva, Investec’s analyst Ian Gordon says the numbers missed his forecasts.

“We perceive that Barclays shares have been well-supported in recent weeks/months as investors have reacted positively to the arrival of the new chairman. This is understandable, but we think the outlook for reported earnings and dividends is challenging,” he opined in a note to investors.

Mr Morzaria declined to comment on threats to quit Britain over the rising bank levy made by HSBC and Standard Chartered, saying only that the charge was “something we have to adjust for” and could cause the bank to “consider our business mix”.

Mr McFarlane has promised to re-allocate the bank’s resources to prioritise growth and returns to shareholders. This could lead to a faster run- down of the non-core division, sometimes referred to as the “bad bank”.

Separately, TSB reported a 153 per cent surge in profits as it continued to win market share from rivals ahead of its planned takeover by Spanish bank Sabadell. Pre tax profits for the first quarter of the year came in at £34.2m.