Barclays facing $435m in fines from US action

Tim Wallace
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BARCLAYS was last night hit by two US regulatory investigations, one of which could leave it facing a fine of $435m (£269.7m).

The news emerged on the same day the bank said it had lost money in the third quarter as PPI claims rose and credit charges grew.

Barclays said the US Department of Justice and the Securities and Exchange Commission are probing whether it was complying with US laws in its ties with third parties who help it win or retain business.

UK regulators are already investigating payments to Qatari investors after the bank raised billions of pounds from the Gulf state five years ago to save it from taking a taxpayer bailout.

The US Federal Energy Regulatory Commission is also set to issue a report and fine – potentially of hundreds of millions of dollars – over alleged manipulation of the Californian energy market between 2006 and 2008. It could also order the firm to hand over some of its profits from the period. Barclays said it will “vigorously defend this matter”.

Meanwhile the bank recorded a loss of £108m for the three months between June and September, thanks to an extra £700m PPI provision and a £1.07bn own credit charge.

That represents an improvement of 68.5 per cent on the £475m loss made in the same period of last year, but a sharp decline from the £817m profit made in the second quarter of 2012.

Excluding those enormous costs, Barclays made an adjusted pre-tax profit of £1.73bn, down 29.4 per cent on the £2.45bn recorded in the third quarter of 2011.

There are more charges to come: Barclays has set aside £450m to cover interest rate swap mis-selling claims.

The bank revealed it has successfully brought investment banking pay down from 46 per cent of income a year ago to 39 per cent now, a savings drive that chief executive Antony Jenkins pledged to continue.

Cost control as well as growth in areas such as Barclaycard allowed the bank to pay a dividend of 1p per share. Jenkins told analysts he wants to increase such payouts soon.