Barclays is subject of two fresh US investigations


Click to follow
The Independent Online

Barclays' already-tarnished reputation faced further damage today as the bank admitted it was the subject of two fresh US investigations.

In light of inquiries by UK authorities into payments between the bank and Qatari investors, Barclays said the US Department of Justice had also launched its own probe.

In addition, the US Federal Energy Regulatory Commission (Ferc) has warned Barclays it faces another fine following an investigation into power trading between 2006 and 2008.

Barclays, still reeling from a series of scandals including the Libor-fixing affair and the mis-selling of payment protection insurance (PPI), saw shares drop more than 3%.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "The spectre of more damage to the bank's reputation in the form of further regulatory probes is weighing heavily on the shares."

The fresh inquiries were revealed as new Barclays boss Antony Jenkins insisted the bank was in good shape despite sliding to a £47 million loss in its third quarter.

The loss was driven by a £700 million hit to cover mis-sold PPI claims and a one-off £1 billion charge against the value of the bank's own credit.

Delivering his first set of results since taking over from Bob Diamond in the wake of the Libor-fixing affair, Mr Jenkins said the lender had "much to do to restore trust among stakeholders" but remained "strong and well-positioned".

The Financial Services Authority and Serious Fraud Office launched investigations in July and August respectively into payments made between Barclays and Qatar Holding.

The bank raised billions of pounds from Middle East investors in 2008, which effectively allowed it to avoid a state bailout, like Lloyds or Royal Bank of Scotland.

Meanwhile, Ferc alleges that Barclays bought and sold electricity in enough volume to move exchange prices up or down to benefit the lender's positions.

Barclays, which is expecting a fine from the US regulator imminently, said it intends to "vigorously" defend this matter.

Stripping out the impact of the PPI charge, the bank reported underlying pre-tax profits for the third quarter of £1.7 billion, compared with £1.3 billion last year.

The investment bank - the powerhouse built by Mr Diamond - more than doubled its third quarter underlying pre-tax profits to £937 million, while UK retail banking slipped 19% year-on-year to £400 million in the same period.

Barclays reduced bad-debt charges by 19% year on year to £825 million in the third quarter, while its exposure to the troubled eurozone economies of Spain, Italy, Portugal, Ireland, Greece and Cyprus fell by 15% to £4.8 billion.

Barclays has endured one of the most turbulent periods in its history after it was fined £290 million by UK and US regulators for manipulating Libor, the interbank lending rate which affects mortgages and loans.

Marcus Agius will be replaced as chairman of the bank by Sir David Walker from tomorrow.

The bank is also in the midst of conducting its own internal investigation into the recent events.

As well as the Libor affair, the bank has faced mounting costs for mis-sold PPI and complex interest rate swap arrangements.

David Hillman, spokesman for the anti-poverty Robin Hood Tax campaign, said: "It's groundhog day at Barclays - knee-deep in scandals for ripping off the public, their casino bankers continue to pocket bumper profits and pay.

"Britain's Wild West banks will be coining it in for eternity unless the Government intervenes and ensures they pay for the wider economic damage they have caused."