The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
Barclays Plc’s profit fell more than expected in the second quarter after it booked charges and penalties in the US, marring a strong period for the bank’s bond traders.
The British lender said a market plunge would increase the cost of buying back US investment products it mistakenly oversold. Barclays also expects to pay $200 million in penalties to the US regulators to settle a long-running probe into unapproved messaging channels used by staff.
Those costs forced the bank to raise its expense outlook for the year, and overshadowed a better-than-expected performance for some of its investment bank. Fixed-income, currency and commodities traders delivered a revenue rise of more than 70%, beating all other global banks, while dealmakers had the smallest drop in fees during a quiet few months.
The performance added up to “a messy quarter,†according to RBC Europe analyst Benjamin Toms, with “unhelpful†litigation and conduct costs weighing down income growth.
Profit before tax at group level falls about 40% to £1.5 billion, against a consensus of £1.76 billion. The corporate and investment bank’s profit almost halved to £784 million.
Barclays revealed in March that it had sold billions more in structured and exchange-traded notes than it had registered for sale with US authorities. It’s now required to buy them back at the original price, taking a hit on any market movements.
The bank said it had taken £984 million in charges to reflect “significant market moves†in the three months through June, when the S&P 500 index falls almost 16%.