Barclays plc (LSE:BARC) Chairman, Marcus Agius, apologised on behalf of the universal bank once again, for the scandals that not only hit it but the greater UK financial sector in the past weeks, as the company reported its half year results.
Sorry may seem be the hardest word but that’s probably the only appropriate thing to say, given the troubles faced by the bank every quarter.
“We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” said Agius, whose seat he will soon vacate – his way of accepting responsibility for all the blows in the bank’s reputation.
One Scandal for Every Quarter
The bank was recently fined £290 million by US regulators in connection with the London Interbank Offer Rate (LIBOR) manipulation and is facing a pile of lawsuits in the United States related to the interest rate rigging.
In response to the Financial Services Authority’s investigation on the sale of interest rate hedging products to small and medium sized enterprises, some £450 million was set aside by Barclays as a “redress exercise”, along with other UK banks.
Barclays, however, said the exact figure is still uncertain, but the amount is rather big, as the bank reported some £759 million in statutory pre-tax profit, down 71% from £2.6 billion for the same period a year ago.
It earlier stated the financial impact will not be material to the group, but the figure is higher than the £300 million the bank has added to PPI claims during the first quarter of the year.
The first blow to the bank’s reputation this year was February’s report Barclays was the target of the HM Revenue & Customs’ crackdown involving a potential £500 million tax avoidance scheme.
Today, a new investigation has been started by the FSA over the bank’s “sufficiency of disclosure” related to fees from commercial agreements linked to capital raising back in 2008 – a new blow to the already bruised reputation of the bank.
The said investigation has dragged the group’s finance director, Chris Lucas and four other current and former senior employees.
The recent issues the bank faced have already claimed the jobs of Bob Diamond, who resigned as Chief Executive, Agius, who’s only staying until a new CEO is named, Jerry Del Missier, the group’s Chief Operating Officer, and two days ago, non-executive director Alison Carnwath, who said it was for personal reasons.
Chairman Agius, still seeing the silver linings, as adjusted profit before tax was up 13% to £4.2 billion, makes a re-affirmation of Barclays commitment to maintaining its leading position in the universal banking business by saying:
“I speak for all of Barclays people when I say how determined we are to regain the full confidence of all our stakeholders; customers and clients, investors, regulators and staff alike.”
Shares were up 6.6% to 163.55 pence by 12:00 GMT, at a turnover of 32 million shares.