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Barclays reveals fresh FSA investigation as profits hit £4.2bn

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Barclays has reported pre-tax profits of £4.2bn for the six months to 30 June but has set aside £450m for swaps redress and revealed its finance director is under investigation by the FSA.

The bank said it is making a provision of £450m for the compensation it will provide to customers who were mis-sold interest rate hedging products, though it admitted the “ultimate cost of this exercise is uncertain”.

Chairman Marcus Agius apologised for the bank’s role in the LIBOR scandal and said Barclays would work to restore its reputation.

In its interim results for the first half of 2012, the bank also revealed that four current and former employees, including finance director Chris Lucas, are involved in an FSA investigation relating to Barclays’ capital raisings in June and November 2008.

“The FSA is investigating the sufficiency of disclosure in relation to fees payable under certain commercial agreements and whether these may have related to Barclays capital raisings in June and November 2008,” Barclays said in a statement.

“Barclays considers that it satisfied its disclosure obligations and confirms that it will cooperate fully with the FSA’s investigation.”

The bank’s adjusted profit before tax rose 13% to £4.2bn for the first six months of 2012, slightly ahead of analyst estimates. Net income for the period rose by 9% year-on-year to £3.1bn.

Its retail division saw pre-tax profits rise 15%, with profits for the corporate and investment banking arm rising 11% – though this masked a 2% decline in investment banking profits.

But these figures, combined with a 38% rise in pre-tax profit for its wealth management income, demonstrate “the benefits of the universal banking model”, Barclays said.

Responding to the controversy surrounding the bank since it paid £290m in fines for attempting to manipulate LIBOR, a scandal which saw CEO Bob Diamond step down, chairman Marcus Agius said the bank would now focus on fundamentals.

“We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders,” he said.

“We must focus on getting the fundamentals right – serving our customers and clients with integrity and maintaining the highest standards of service – while reviewing our business values and working to become more transparent […] we understand that we will be judged on our deeds and not our words.”


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