Barclays today put aside £500 million to cover fines and payments it expects for its role in the alleged rigging of the £3 trillion-a-day foreign exchange markets, the latest scandal to hit the banking industry.
The scale of the charge is another blow to chief executive Antony Jenkins, who replaced Bob Diamond — who quit in August 2012 following the Libor scandal — with a brief to clean up the bank.
Barclays becomes the first bank to reveal exactly how much it expects to pay as part of a deal between the Financial Conduct Authority and US regulators and six banks.
A settlement could come as early as next month and cost the banks, which include HSBC and Royal Bank of Scotland, between £1 billion and £2 billion.
UBS and Deutsche bank this week made huge extra “litigation” provisions but did not specify how much was for the forex scandal.
Today’s £500 million provision on forex was accompanied by a further £170 million which has been set aside for mis-selling PPI, which takes the total PPI bill for Barclays to more than £5 billion.
But in another area of mis-selling — interest-rate hedges mis-sold to small businesses — the bank clawed back £160 million of provisions, lowering the total to £1.34 billion.
The news came as Barclays reported a 5% rise in profits for the first nine months of the year to £4.9 billion.
Jenkins would not comment further on the forex scandal but said: “In aggregate, this is a good performance from the group, our strategy is working, and we expect to see continued progress as we go forward.”
The bank saw a strong performance in its UK retail and corporate business, Barclaycard and in Africa.
But Jenkins admitted that the investment bank, formerly Barclays Capital, had been “disappointing” in the last quarter as its profits fell by 13%. The investment bank has accounted for roughly half the 7800 jobs axed by Barclays in the past year and is due to cut a further 2500 people in each of 2015 and 2016 as Jenkins trims back on the riskier areas of “casino banking”.
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The job cuts, which will reach 19,000 by 2016, saw Barclays’ cost ratio come down to its lowest level for five years in the latest quarter. Barclays passed the recent European bank stress tests and, with a core tier 1 ratio of 10.4% once it completes the sale of its Spanish business, should also pass the tougher UK tests in December.
Investors liked the underlying results but Barclays’ shares fell 0.8p to 219.7p.
