Mis-selling charge hits Barclays first half profit
LONDON (AP) — Britain's Barclays PLC saw its profits fall by a third in the first half of the year as the bank's earnings were hit by a charge related to the mis-selling of products to customers.
The bank said Tuesday that its pretax profits were down 33 percent at 2.64 billion pounds ($4.3 billion). Profits were dented by a 1 billion pound charge set aside to compensate customers for mis-selling them some financial instruments, and losses on acquisitions and disposals.
Regulators have said British banks, including Barclays, could be forced to pay customers billions of pounds in compensation over the mis-selling of payment protection insurance, that was supposed to cover the repayment of people's loans if they experienced a fall in income because of illness or job loss.
The industry has been accused of mis-selling the policies on a wide scale, raking in profits as many customers were unaware they were even paying for them — or could never have claimed on the policies.
Barclays said that without the provisions for PPI compensation claims, pretax profits at its retail and business banking units worldwide would have risen 33 percent to 1.446 billion pounds. Instead, they fell 63 percent to 446 million pounds.
Its corporate and investment banking division saw profits before tax fall by 22 percent, hit by losses on acquisitions and disposals. Pretax profits at its wealth and investment management business fell 36 percent.
The bank said the group's liquidity and funding positions were still strong.
Chief executive Bob Diamond said the bank was still operating in a difficult trading environment.