UK’s Barclays Looks To Move On From Libor Scandal
Barclays reports third-quarter results on Wednesday, with new chief executive Antony Jenkins aiming to restore some stability after a tumultuous summer for the UK bank dominated by fallout from the Libor interest rate rigging scandal.
Jenkins, appointed CEO at the end of August, has taken over from Bob Diamond, who resigned after Barclays was fined for its part in manipulating the Libor benchmark interest rate. Investors are looking for clues on how radical the new CEO will be in shaking up the bank.
Jenkins, due to unveil a full strategic plan in February, is expected to focus more on retail banking and less on riskier investment banking but the shift could be gradual as the latter provides the bulk of the bank’s profits.
Barclays is expected to report an adjusted third quarter pretax profit broadly in line with analysts forecasts of 1.7 billion pounds ($2.7 billion). Analysts say it is in a stronger position than rivals to cope with troubled euro zone economies and tougher finance sector regulations.
Swiss bank UBS unveiled plans on Tuesday to fire 10,000 staff and wind down its fixed income business. Barclays and Deutsche Bank stand to benefit from UBS’s retreat. Deutsche Bank’s investment bank produced record third quarter revenue and helped lift group profit by 20 percent.
Barclays has already warned it will take a 700 million pound charge in the third quarter for the mis-selling of payment protection insurance. It is also expected to take a 1.1 billion pound accounting-related hit on the value of its own debt.
The bank suffered another blow this week when a High Court Judge ordered it to stand trial over damages stemming from Libor manipulation – the first such case to be heard in a British court.
The case relates to the mis-selling of interest rate swaps to small businesses, for which Barclays has already set aside a 450 million pound provision, a number which analysts now believe could rise further.
Barclays Chairman Marcus Agius will step down on Wednesday, handing over to David Walker, who has said he will work closely with Jenkins to shake up culture and reshape the bank.
Reuters
