July 6, 2015 / 8:34 PM / 4 years ago

Barclays spends $150 million on U.S. 'living will,' sees costs rising

LONDON (Reuters) - British bank Barclays Plc (BARC.L) said it has spent more than $150 million to develop a resolution plan for its U.S. operations that would allow it to be wound down if it hits trouble, and warned of further extra compliance costs ahead.

In a submission to the U.S. Federal Reserve outlining plans for its so-called “living will” released on Monday, Barclays said it expects to incur further costs from the need to set up an intermediate holding company for its U.S. business by July 2016.

Those requirements, in particular a need to meet U.S. leverage rules, “are likely to increase the operating costs and capital requirements and/or require changes to the business mix of Barclays’ U.S. operations,” the bank said.

It said implementation of the ‘Volcker Rule’, which bans proprietary trading, will also require it to develop an extensive compliance and monitoring program inside and outside the United States, and “it is therefore expected that compliance costs will increase”.

Barclays said it plans to shrink the size of its U.S. broker-deal unit Barclays Capital Inc. to $185-215 billion by July 2016, from $248 billion at the end of 2014 and as much as $521 billion in 2010.

“Barclays has a global recovery planning process in place that includes a range of feasible options available to manage the viability of the group during stressed conditions,” it said in its submission.

Barclays said it had addressed shortcomings identified by U.S. regulators in its 2013 ‘living will’ submission.

Editing by Carmel Crimmins

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