Barclays reports new UK inquiry, US lawsuits as banks sees 9 pct gain in H1 adjusted profit

LONDON – Barclays PLC said Friday that it faces a fresh investigation by financial services regulators in the United Kingdom and a new batch of class-action lawsuits in the United States, legal troubles that promise a continuing public relations headache for the British lender.

Still, Barclays reported a 9 per cent gain in adjusted net profit in the first half of the year thanks to lower operating costs and modest growth in income, leading to an adjusted net profit for the six months ending June 30 that hit 3.1 billion pounds (US$4.9 billion.)

Adjusted pretax profit of 4.2 billion pounds beat the analysts’ consensus of 3.8 billion pounds, pushing shares up more than 7 per cent to 164.45 pence on the London Stock Exchange.

But the revelation that Barclays faces a new inquiry and more lawsuits means that the European heavyweight could struggle to restore a public image tarnished by the bank’s participation in a rate-setting scandal which has drawn outrage on both sides of the Atlantic.

Friday’s earnings report did not reflect any impact of the scandal, which was revealed on June 27 when U.S. and British agencies announced fines totalling $453 million on the bank. That plunged the bank into turmoil as Chief Executive Bob Diamond and Chief Operating Officer resigned within days, and chairman Marcus Agius — now serving as executive chairman — said he would go as soon as his successor is chosen.

“We are sorry for the issues that have emerged over recent weeks and recognize that we have disappointed our customers and shareholders,” Agius said. “I speak for all of Barclays people when I say how determined we are to regain the full confidence of all our stakeholders — customers and clients, investors, regulators and staff alike.”

Friday’s report revealed that Britain’s Financial Services Authority had begun an investigation “involving Barclays and four current and former senior employees, including Chris Lucas, Barclay’s director of group finance.” The bank said regulators were investigating whether Barclays had properly disclosed fees payable “under certain commercial agreements” in connection to the bank’s fundraising efforts between June and November 2008.

The report said the bank was confident it had “satisfied its disclosure obligations” but didn’t go into any further detail.

Barclays also reeled off a list of class action lawsuits filed against the lender in the United States over its alleged illegal rate-fixing activities. The most recent, filed on July 6, was by plaintiffs who had purchased financial instruments linked to the doctored rates. Barclays said it wasn’t possible to estimate the lawsuits’ possible impact.