Barclays cooperating with investigation into manipulation of currency markets

Bank reveals it is assisting global regulators and is contesting £50m penalty from Financial Conduct Authority

Barclays has revealed it is cooperating with the new investigation by global regulators into whether the £3 trillion a day currency markets have been manipulated.

As it published its third quarter results, Barclays confirmed it is also contesting a £50m penalty from the Financial Conduct Authority for behaving “recklessly” in the way it raised funds from Qatar to avoid a taxpayer bailout in 2008.

The bank, which last month tapped shareholders for £6bn to bolster its financial strength, said an investigation by the Serious Fraud Office was continuing alongside the one conducted by the City regulator. The US authorities are also investigating the 2008 fundraising.

In disclosing that it has received requests for information about its foreign exchange activities, Barclays is joining a number of other banks – including Royal Bank of Scotland, Deutsche Bank and UBS – admitting to cooperating with the authorities and also shedding light on the nature of the investigation that includes regulators in the UK, the US and Asia.

Barclays said regulators were investigating foreign exchange trade trading “including possible attempts to manipulate certain benchmark currency exchange rates or engage in other activities that would benefit their trading positions”.

“The investigations appear to involve multiple market participants in various countries. Barclays bank has received enquiries from certain of these authorities related to their particular investigations, is reviewing its foreign exchange trading covering a several-year period through August 2013 and is cooperating with the relevant authorities in their investigations,” the bank said.

The investigations emerged after reports of allegations that traders at major banks were putting in client orders ahead of a 60-second window when benchmarks run by WM/Reuters – and used by fund managers to value their investments – are set.

The investigations are at an early stage and could be on the scale of the Libor scandal, in which Barclays was the first bank to fined, in June 2012, with a penalty of £290m. That led to the departure of its chief executive, Bob Diamond, and the promotion of the retail banking head, Antony Jenkins, who has embarked on a strategy to restore the reputation of the bank.

Jenkins said his new team – he has a new finance director, retail head and bosses of the investment bank – needed to push harder in the final quarter of the year and into 2014.

After being forced into the cash call by the Bank of England, Jenkins said the bank was continuing to “reassess the balance sheet for further leverage reduction opportunities consistent with preserving our strong franchises, supporting lending to the UK economy”.

In the first nine months of the year, Barclays’ profits rose to £2.8bn from £962m, although this included the cost of buying its back its own debt.

The bank is in discussions with its shareholders about ways to avoid the cap on bonuses being introduced by the EU at the start of next year by introducing a new allowance for its highest paid staff. It said the closely-watched compensation to income ratio its investment bank – measuring what proportion of its income it was paying out to its staff – had risen to 41% from 40%.

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