Barclays paid out billions of pounds in currency market manipulation litigation costs in 2014 as well as more for dealing with a number of retail investor mis-selling scandals.
But Barclays’ leaders are still pretty happy with themselves.
In fact, chief executive Antony Jenkins is so chipper about the results, he will take his first bonus as leader of the bank since 2012. His bonus is £1.1 million.
While Barclays confirmed in its 2014 results statement that it racked up a 12% increase in profit before tax to reach £5.5 billion, if you included the “one-off” litigation and charges, this figure tanked by 21% to £2.26bn.
Last year, Barclays spent £1.25 billion on dealing with the alleged rigging of foreign exchange rates. It added that this figure includes the additional provision of £750 million recognised in the fourth quarter last year.
“We remain focused on addressing outstanding conduct issues, including those relating to Foreign Exchange trading,” said Antony Jenkins, CEO at Barclays. “I regard the behaviour at the centre of these investigations as wholly incompatible with our values, and I share the frustration of colleagues and shareholders that matters like these continue to cast a shadow over our business.”
“But resolving these issues is an important part of our plan for Barclays and, although it may be difficult, I expect that we will make significant progress in this area in 2015. So despite our real progress in 2014, we still have more work to do.
“We are determined to build on the momentum across the Group, to continue to improve returns across our businesses, and to accelerate execution of our plans. 2015 will be a year of continued delivery for Barclays.”
Barclays still has a challenge ahead of it, when it comes to the FX market fixing investigation. While Citi, HSBC, JPMorgan , the Royal Bank of Scotland (RBS) and UBS settled with US and UK authorities over the FX rigging scandal, Barclays was notably left out of the joint settlement of £2.2 billion.
It is also battling overseas with the New York Attorney General Eric Schneiderman.
In June last year, Schneiderman slapped a securities fraud lawsuit on Barclays. He claimed that the bank gained an unfair edge through its high frequency trading (HFT) and dark pool trading practices.
HFT allows you to buy and sell large quantity of trades incredibly quickly. Dark pools are trading platforms that allow these large amount of trades to be bought and sold anonymously.
“The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit.
“Barclays grew its dark pool by telling investors they were diving into safe waters. According to the lawsuit, Barclays’ dark pool was full of predators — there at Barclays’ invitation.
“No regulator — no matter how broad their authority — can succeed on its own. I want to personally thank those that have courageously reported wrongdoing to our office and encourage others to do the same.”
Meanwhile, the bank added that it hived away another £200 million in the last quarter for admin and compensation costs related to the mis-selling of payment protection insurance (PPI). This brings the bank’s total up to £1.1 billion for the scandal.
It also spent £1.1 billion dealing with the mis-selling of interest rate hedging products to small to medium enterprises.
“The review is now substantially complete with redress outcomes communicated to nearly all customers covered by the redress exercise during 2014,” said the bank in its results statement.
Barclays also wrote down £935 million from the value of its education, social housing and local authority loan portfolio. Basically, the loans were worth less than £16 billion in 2014 and rarely sell so they were reclassified as one of the lowest tier types of loans – “level 3.”
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