BackBarclays sorry for Libor scandal as profit jumps
Barclays sorry for Libor scandal as profit jumps
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London: British bank Barclays Plc pledged to repair the damage to its reputation caused by its part in the interest-rate rigging scandal that has rocked the banking industry, after beating forecasts with a £4 billion ($6.3 billion) profit.
“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 on Friday.
“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%.
The bank said there has been no exodus of clients and its performance during July has been ahead of last year.
Barclays is searching for a new chief executive and chairman after they quit following a record 290 million pound fine last month for rigging the Libor interest rate benchmark, sparking fierce criticism about its culture and risk-taking.
Former J.P. Morgan banker Bill Winters is favourite to be CEO and former UK Cabinet Secretary Gus O’Donnell is front-runner for chairman, according to industry sources and UK media reports.
Barclays shares were up 4% to 159.9 pence in early trade, topping the FTSE 100 index.
An inquiry by UK lawmakers into the Libor scandal showed that Britain’s financial regulator had warned Barclays four months earlier that its culture was too aggressive and must change.
It exposed a strained relationship with regulators, and as the backlash built, the Bank of England effectively forced Bob Diamond to resign as chief executive.
Agius, a Cambridge- and Harvard-educated pillar of London banking who has been criticised for not reining in Diamond, has taken on executive duties but will leave when a successor is found.
Resilient results
Investors said what Barclays is doing to rebuild its brand and restore shareholders’ confidence is more significant than the results.
The bank reported an underlying pretax profit of £4.2 billion ($6.6 billion) for the six months to the end of June, above an average forecast of £3.8 billion from analysts polled by the company and up 13% from a year ago.
It said it faces a bill of £450 million to pay compensation to customers misled about interest-rate hedging products to small businesses. The figure is based on initial estimates and Barclays said the ultimate cost is uncertain.
UK banks agreed last month to pay compensation to customers who were misled about the products.
Barclays’ investment bank fared better than most rivals in a tough second quarter, with income of £3 billion up 5% from a year ago and down 12% on the first quarter.
Barclays is reviewing all parts of its investment bank, people familiar with the matter said, and the Libor scandal has intensified calls for it to shrink the business.
It has admitted its culture needs to change and has picked veteran lawyer Anthony Salz to lead a review of practices, expected to be completed before May 2013.
Barclays said its statutory profit fell 71% to £759 million including the fine, interest rate mis-selling charge and movement in the value of its own debt.
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