Barclays Catches More Heat
After posting better-than-expected first half results and saying sorry for its role in an interest-rate rigging scandal, the British bank, Barclays (NYSE: BCS), revealed a new regulatory probe and more U.S. lawsuits.
Barclays beat expectation with its half-year results. Profits were up 13% from a year ago, at 4.2 billion pounds, or more than $6 billion.
The good results came in the wake of a recent scandal that saw Barclays fined a record 290 million pounds for rigging the inter-bank lending rate.
Still, many feel the results aren’t enough to repair the damage to the bank’s reputation.
“There are a number of areas of concern: Their exposure to peripheral sovereign debt,” said Michael Hewson of CMC Markets. “Now they’ve cut that back to about 5.6 billion euros.”
But there is another notable concern, and that’s the number of corporate loans to Spanish and Italian companies. If those economies deteriorate, Barclays could face further losses.
And with the departure of the bank’s CEO, Bob Diamond, earlier this month, closely followed by his CFO, Jerry del Missier, Barclays now needs to address the power vacuum at the top of the organization.
Additionally, Britain’s financial regulator has started an investigation into Barclays and four current and former senior employees, including finance director, Chris Lucas.
The Financial Services Authority is investigating whether the bank made sufficient disclosures about the fees it paid under commercial agreements
Barclays also faces more U.S. lawsuits over the LIBOR scandal. More than a dozen other banks are expected to be drawn into the investigation.