Barclays could face additional £1.2bn legal costs

Legacy issues could cost Barclays banks an additional £1.2 billion, according to research and brokerage firm Sanford C Bernstein. The costs relate to dark pool trading, mis-selling fines and other regulatory issues.

This year Barclays controversially decided to increase its bonus pool by 10%, taking it to £2.38 million despite profits falling and announcing job cuts. At its annual general meeting in April the bank faced strong opposition from shareholders, with 34% failing to back its remuneration package.

Barclays has previously commented that legacy issues will continue to have a significant impact on its business and has already set aside over £1.2 billion in provisions.

However, in a research note, Sanford C Bernstein has said it could face a further £700 million charge to cover the costs of manipulating the currency trading market, £200 million to settle an investigation by the New York attorney general’s office into the bank’s private stock market, known as a dark pool.

The New York attorney general has accused the bank of “a flagrant pattern of fraud, deception and dishonest with Barclays clients and the investing public,” in a complaint file. Barclays had denied these claims, stating that the suit is based on factual errors.

Shares at the bank fell 6.5% after the lawsuit, which focuses on the bank misrepresenting the risks of high frequency trading to its big institutional clients, was filed.

Other costs around compensating people who have been mis-sold products are also expected to add a further £300 million.

Over recent years Barclays has faced a number of fines and probes relating to its operations, including investigations looking at market manipulation, mis-selling scandals and data security issues.

Photo: Tjeerd Wiersma via Flickr 

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Further reading:

Barclays fined over gold price fixings

Barclays faced over record retention failure

Barclays faces probe into foreign exchange scandal

Three former Barclays employees charged over Libor rigging

Barclays shares down 6.5% after lawsuit over high frequency trading