Barclays is understood to publish its finacial mis-selling endevours this week and announce an increase in the compensation funds set aside to deal with three types of financial products mis-sold by the Banking Giant.
The three types of Barclays mis-sold financial products:
- Payment Protection Insurance
- Interest Rate Swaps
- Credit Card Identity theft cover
It is understood that Barclays will be topping up its mis-sold financial compensation funds. The current mis-sold comensation provisions stand at :
- Payment Protection Insurance : £ 2.6bn
- Interest Rate Swaps : £ 850mil
Although unconfirmed at the moment, we believe that Barclays will increse the provisions for Interest Rate Swap mis-selling to £ 1 billion.
Barclays Financial Mis-Selling Bill
Barclays directors are also understood to have discussed taking its first hit for compensating CPP customers at a board meeting this week.
The final bill will be signed off by Mr Jenkins, Sir David Walker, the bank’s chairman, and the soon-to-depart finance director Chris Lucas on Monday.
A Barclays spokesman declined to comment on the size of the new compensation figures but it is understood that they will take the amount it has set aside for swaps mis-selling to well over £1bn.
The scale of the new provisions will partly explain why Barclays is also planning to announce a major capital-raising comprising conventional shares and contingent convertible (or ‘coco’) bonds alongside its results.
That follows pressure from the Prudential Regulation Authority for Barclays to meet a target measuring the strength of its balance sheet, called the leverage ratio, by the end of next year.
The announcement will be made as part of Barclays’ half-year results on Tuesday, and could undermine Mr Jenkins’ efforts to overhaul the bank’s reputation following last summer’s Libor rate-rigging scandal.
Barclays was fined £290m for its role in the affair, leading to the departure of Mr Jenkins’ predecessor, Bob Diamond.
It was also recently hit with a £300m penalty by a US energy regulator for attempting to manipulate electricity prices, although the bank is appealing against it.
Barclays will not be the only lender to add to its PPI mis-selling provisions during next week’s results, with Lloyds Banking Group and others also expected to belie suggestions that the tidal wave of compensation claims had abated.
Barclays has, though, been particularly affected by the way interest is calculated on PPI compensation claims because of its liabilities dating back many years.
Mr Jenkins will also spell out the progress of his overhaul of the bank, called Transform, in which he will say that Barclays is exceeding cost-reduction targets announced in February.
+Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
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