Saturday July 28, 2012
Barclays reveals new probe, more US Libor lawsuits
LONDON: Barclays Plc revealed a new regulatory probe and more US lawsuits, making it harder for the British lender to repair the damage to its reputation caused by its role in the interest-rate rigging scandal shaking banks.
Despite these latest blows, Barclays beat forecasts with a profit of more than £4bil (US$6.3bil) in the first six months of the year. The bank said its performance during July was ahead of last year and there had been no exodus of clients.
Barclays shares were up 4.8% to 161p by 0959 GMT, outperforming a 0.2% fall in the European bank index.
The bank said yesterday Britain's financial regulator had started an investigation involving the bank and four current and former senior employees, including finance director Chris Lucas.
The Financial Services Authority (FSA) is investigating whether the bank made sufficient disclosures about the fees it paid under commercial agreements related to its capital raisings in June and November 2008. The bank said it was satisfied with its disclosures, but refused further comment.
It also faces more US lawsuits after a record £290mil fine last month for rigging the London interbank offered rate (Libor), sparking fierce criticism about its culture and risk-taking.
More than a dozen other banks are expected to be drawn into the global Libor investigation and could also be fined.
“We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” chairman Marcus Agius said yesterday.
“I am confident we can, and will, repair the reputational damage done to our business in their eyes and those of all our stakeholders,” Agius said, reaffirming a commitment to deliver a return on equity of 13%.
Barclays is searching for a new chief executive and chairman after they quit following the Libor scandal.
Agius said the board was focused on filling those positions, but gave no update on likely timing.
Investors are keen for one or both of the CEO or chairman to come from outside, to be able to implement a farreaching overhaul.
Former J.P. Morgan banker Bill Winters is favourite to be CEO and former UK Cabinet Secretary Gus O'Donnell is frontrunner for chairman, according to industry sources and UK media reports. - Reuters