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It’s as if regulatory authorities in the United States cannot get enough of the British financial giant, Barclays plc (LSE:BARC), that after having fined the bank as much as £290 million for fixing the London Inter-Bank Offer Rates (LIBOR) and went to investigate major banks all over the world for the same, two new investigations have commenced just as the London bank is picking itself up from the ashes of past mishaps.
Today, Barclays disclosed that the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) are trying to find out if there laws and regulations that were broken when Barclays win clients and retain businesses, given its association with third parties.
A separate probe had also been ordered by the US Federal Energy Regulatory Commission (FERC) Office of Enforcement over the bank’s dealings in power trading in the Western US region between 2006 and 2008.
“Barclays intends to vigorously defend this matter,” the bank, which seemed like a wounded soldier trying to get up only to be downed by arrows again, said in a statement.
As Libor was for Bob Diamond, so will these two new scandals will be for the new Chief Executive, Antony Jenkins, who vowed to restore Barclays reputation after being damaged by scandal after scandal as tax avoidance, anomalous sale of interest rate hedging products, the infamous Libor scandal and the still ongoing ghost of payment protection insurance.
Still Strong
But while new malpractices are yet to proven, Jenkins declared today that the bank continues “to have good momentum…despite the difficulties we faced through this period”.
“While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned,” Jenkins continued, referring to the banking group’s financial status for the past nine months to 30th September 2012.
Using adjusted computations, Barclays said profits were up 18% to over £5.9 billion, less than a billion pounds more than what it earned during the same period last year. On a quarter basis, Barclays’ profit was £1.72 billion, or a 29% increase from last year’s £1.33, in adjusted terms.
Adjusted terms were presented and being used by the bank to provide a more consistent basis in assessing business performance, which excluded impacts of own credit, gains on debt buy-backs, impairment charges, the disposal of BlackRock, Inc., PPI claims, provisions for redress related to the interest rate hedging products, goodwill impairments, and gains and losses on acquisitions and disposals, but which includes the payment provided for the Libor-fixing.
Reality Check
Unfortunately, reality has to incorporated in the bank’s financial statement that whatever gains it made between July and September, all of that were obliterated by charge of own credit of about over a billion pounds and an additional £700 million in PPI provisions, resulting in a statutory loss of £47 million during the third quarter compared to the £2.42 billion it earned during the same period last year.
For the year to date ending 30th September 2012, statutory profit before tax is down a massive 86% from £5 billion last year to just £712 million.
As for the October position, Barclays admitted it was affected still by “challenging economic environment and subdued market volumes” and that, cautiousness is still the underlying rule for the business.
The market, too, was probably acting out of cautiousness as Barclays share price fell as much as 5% earlier to about 229 pence a share at 11:00 AM GMT, following the overwhelming updates the bank provided.
At the least, one person – Chairman Marcus Agius – will be able to relax starting tomorrow when he starts his day becoming an ex-director of the bank.
