Barclays makes further provision for scandals and cuts costs

Barclays Canary Wharf

Barclays set aside £1.8bn in the first half of the year to compensate customers for a string of mis-selling scandals and fines.

The figure was revealed as John McFarlane, the chairman who is standing in as chief executive following the ousting of Antony Jenkins earlier this month, pledged to accelerate the disposal of risky businesses, cut costs at the scandal-hit bank and change the dividend policy.

Included in the provision is a further £600m for the payment protection insurance mis-selling scandal and £250m to compensate customers with packaged bank accounts that had other products, such as insurance, attached to them.

The bank was hit with £1.5bn fines for rigging foreign exchange markets in May, along with other banks, which dented the results.

Even so the bank said its first-half profits had increased 25% to £3.1bn. McFarlane set out his priorities for the bank, which appeared to include a commitment to the investment bank, where he said he was pleased with the performance.

He said there would be “increased focus on our core franchises: what we are good at, where we are good at it and what is financially compelling to us”.

“That means aligning our effort and investment behind our key franchises of UK personal and commercial banking, investment banking in Europe and the US, our cards business, and on Africa. We will also act quickly to curtail activity which is marginal or which will not deliver the return on equity we require,” he said.

The plan put in place by Jenkins to cut the non-core division to £50bn by 2016 has been increased to £20bn in 2017. The cost-income ratio - a measure of efficiency - is to fall to the “mid 50s” from 70% now - a move that raise fears about further job cuts on top of 19,000 announced year ago.

While the dividend is being set a 6.5p - the same as last year - McFarlane is scaling back promises made by his predecessor.

Powered by article was written by Jill Treanor, for on Wednesday 29th July 2015 08.00 Europe/ © Guardian News and Media Limited 2010

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