Barclays Sets Aside a Further 1 Billion Pounds for Mis-selling Costs

LONDON -- Following yesterday's news that two senior executives are to resign from the bank, Barclays (LSE: BARC  ) (NYSE: BCS  ) this morning informed the market of its intention to contain additional provisions to the tune of 1 billion pounds for Interest Rate Hedging Products (IRHP) and Payment Protection Insurance (PPI) in its full-year results, due in a week's time on Feb. 12 .

Barclays has increased its provision for IRHP redress by 400 million pounds at Q4 2012. This brings the cumulative provision to 850 million pounds, of which 36 million pounds had been utilised as at Dec. 31,2012. 

This follows the bank's pilot review of IRHP sold to small and medium-sized enterprises, alongside the FSA's report on this review and those conducted by other banks.

Additionally, Barclays will also provide a further 600 million pounds for PPI redress, principally as "a result of a higher than anticipated response rate to pro-active mailings in Q4." This brings the cumulative provision to 2.6 billion pounds, of which 1.6 billion pounds had been utilised as at Dec. 31, 2012.

Management commented: "Based on claims experience to date and anticipated future volumes, the provision represents Barclays best estimate of expected future PPI redress payments and claims management costs. Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of the PPI provision."

Further news was released by the bank this morning, announcing the appointment of Diane de Saint Victor as a non-executive director.

De Saint Victor is currently general counsel, company secretary and a member of the group executive committee of ABB Limited, the Swiss publicly listed international power and automation technologies company. She was formerly senior vice-president and general counsel of EADS, the European aerospace and defence company whose proposed merger with BAE Systems recently broke down.

Barclays chairman Sir David Walker commented: "I am pleased to announce Diane's appointment to the Barclays Board. Her background in legal and regulatory matters and in leading cultural change at ABB will bring a valuable perspective to the Board as we implement the TRANSFORM programme and embed Barclays new Purpose and Values."

With De Saint Victor's previous responsibilities at ABB including head of Legal and Integrity Group, Barclays have acted swiftly and installed a highly respected individual following the bank's recent management overhaul, which should go some way to appeasing shareholders.

Indeed, Barclays shares lifted marginally on both sets of news this morning, up 1.2% to 295 pence.

There is clearly some doubt still surrounding the banking sector at the moment, though, despite the good gains made by the likes of Barclays, Lloyds, HSBC, and RBS since the new year began, as the shadow of the Libor scandal remains hanging over them. 

With plenty of other investing opportunities available in the FTSE 100, private investors might turn to the share we at The Motley Fool believe could boost their income. Its shares might be worth 21% more than their recent price, and offers a 5.7% income. Want to find out more? Well, just click here to download the report -- it's completely free, and will be sent to your inbox immediately!

link


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2237205, ~/Articles/ArticleHandler.aspx, 9/2/2014 10:18:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement