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Daily Digit: Barclays shares drop 5% on U.S. probe news

Wednesday, October 31, 2012 - 01:34

Oct. 31 - Barclays, already rocked by an interest rate rigging scandal, unveiled two new U.S. regulatory investigations into the bank's financial probity on Wednesday and said its profit was hit by charges for mis-selling insurance. Hayley Platt reports.

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5 percent is today's daily digit in Europe - the amount Barclays shares dropped after it warned investors it's facing two new investigations by U.S. regulators. The bank says it's close to being fined over an investigation into the manipulation of power prices between 2006 and 2008. And it's being investigated over whether its business relationships with third parties complied with U.S. laws. The double blow was made worse by third quarter results. After adjustments, pre tax profits were down 23 percent to just over 1 billion pounds. A series of charges were blamed including 700 million pounds for mis-sold payment protection insurance in the UK. It also lost 1.1 billion pounds on the value of its own debt, bringing the total loss for the quarter to 47 million pounds. On top of the recent interest rate rigging scandal asset manager Alpesh Patel says Barclays could now follow UBS and start shedding staff. SOUNDBITE: Alpesh Patel, Praefinium Partners, saying (English): "They do need to cut costs because that's what's killing the share price is how much is being paid to employees and staff and therefore the earnings tend to be depressed the profits tend to be depressed and therefore the PE multiples are not being reflected in the share price." Investors are concerned the legal problems could handicap the new CEO's efforts to overhaul the company. The 5 percent drop also reflects the fact that Barclays performance in investment banking was weaker than most of its rivals.

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Daily Digit: Barclays shares drop 5% on U.S. probe news

Wednesday, October 31, 2012 - 01:34