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Barclays sees investigation provisions rise

Barclays sees investigation provisions rise

More than £1bn of additional provisions - up from £500m in 2014 - were recognised by Barclays this year in relation to ongoing investigations and litigation including issues with foreign exchange trading.

The bank’s third quarter results revealed that this figure included provisions of £270m over the last three months, relating to the settlement of two residential mortgage backed securities claims with the National Credit Union Administration and the settlement of certain legacy benchmark litigation.

Additional UK customer redress provisions of £1.3bn - up from £910m last year - were also recognised. These included a third quarter provision of £290m redress costs as a result of an internal review relating to rates provided to certain customers on foreign exchange transactions between 2005 and 2012.

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During the first half of this year, charges of £282m for Packaged Bank Account redress costs and £750m of PPI redress costs were recognised, although there were no additional provisions for PPI redress made in the third quarter.

The bank’s half year report showed that additional UK customer redress provisions of £1.03bn were made - up from £900m in the first half of 2014 - based on an updated estimate of future redress and associated costs.

Yesterday, Lloyds Banking Group revealed it had also increased provisions for expected PPI payouts by a further £500 million in the third quarter, bringing the total amount provided to £13.9bn.

Tushar Morzaria, Barclays’ group finance director, noted that the Financial Conduct Authority’s proposed consultation for the introduction of a deadline by which consumers would need to make their PPI complaints or else lose their right to have them assessed.

“This consultation is expected to propose rules and guidance concerning the handling of PPI complaints in light of the 2014 Supreme Court decision in Plevin v Paragon Personal Finance, with Plevin-type complaints also being subject to the same deadline,” he stated, adding that the bank will monitor these developments in its assessment of provisioning for PPI related costs and redress.

Meanwhile, the group saw adjusted profit before tax up 4 per cent to £5.1bn, reflecting improvements in all core operating businesses. However, adjusted income decreased 3 per cent to £19bn, as non-core income fell £980m to £48m.

Corporate income grew 5 per cent from balance growth and improved deposit margins, while personal income reduced 3 per cent, due to mortgage margin pressure and lower fee income.

Earlier this week, Barclays confirmed that James E Staley will be appointed as group chief executive with effect from 1 December.

peter.walker@ft.com