Following the publication of their interim results for 2015 last week, Barclays, along with many other banks, are still having to tailor their finances to ensure their regulatory divisions have the deep pockets needed in the current climate of enforcement actions.
Whilst there were some positive results for the shareholders to smile about, for example, pre-tax profits for HY1 2015 at £3.1bn, an increase of 25% on the same period last year, I was much more interested in seeing whether any more regulatory woes were being provided for.
A few items caught my eye and I thought they’d be of interest to you, see what you think:
- Provisions of £484m have been held for “legal, competition and regulatory matters”.
There’s not an awful lot more information regarding this figure to explain what the legal, competition and regulatory matters might be. However, it does indicate that this figure is down from £1690m in December 2014, so maybe they’re seeing fewer enforcement actions on their horizon.
- Barclays have made additional provisions of £800m for ongoing investigations and litigation, primarily relating to forex. A nil provision was made for the same period last year.
This additional amount is earmarked, despite settlements this year of £1608m, in relation to industry-wide investigations into the foreign exchange market and the setting of the US Dollar ISDAFIX benchmark. This suggests that more forex pain is being anticipated, it also brings the total provisions by Barclays relating to this area to a staggering £2050m.
- Additional UK customer redress provisions equating to £1032m have also been made, and increase from £900m for the same period last year.
This figure includes additional charges for PPI redress based on an updated estimate of £750m. As at June 2015 the PPI redress provision held by Barclays was £1268m, which is up from £1059m in December 2014. Again, this suggests that Barclays believe the PPI headache is set to continue, and I’d have to agree if the number of PPI calls I’m still receiving is anything to go by.
It’s been another interesting peek into the finances of one of Britain’s largest and most influential banks. It appears that they are coming to terms with their role in some of the industry’s most high profile scandals and are continuing to pay their dues, particularly around forex and PPI.
This is a follow up to earlier blogs where we looked at company results, (see Goldman Sachs, RBS, HSBC and Standard Chartered), and goes some way to illustrate that they’re not alone. We’ll bring more of the same for others in the sector as their results are posted.
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