Barclays takes £1.3bn hit from trades blunder

BArCLAYS profits plunged by a quarter following a costly trading blunder in the US.

The British lender, which in recent years has focused on building its investment bank, saw profit before tax slide by 24pc in the first half of the year to £3.7bn.

The bank was forced to set aside £1.3bn to cover its trading debacle in the US, of which £165m is a penalty expected to be levied by America’s financial watchdog.

The issue stemmed from a paperwork error, which saw Barclays sell billions more financial products, known as ‘structured notes’, in the US than it was allowed to.

It has now been forced to buy those products back from investors, at great cost.

Boss CS venkatakrishnan, whose eight-month tenure has so far been marred by a series of other historic mishaps, has commissioned an external review and an internal investigation. The lender also set aside another £165m to cover predicted penalties from yet another US investigation, which spanned several banks and probed employees’ use of personal mobile phones and ‘unauthorised apps’ such as WhatsApp, to communicate for work purposes.

Despite the trading gaffe, Barclays boosted its interim dividend to 2.25p per share from 2p last year, and announced a further share buyback worth up to £500m in an effort to return more money to shareholders. While Lloyds Bank this week said it was starting to see some customers alter their behaviour in the face of the cost of living crisis, Barclays said it has not seen any similar signs yet.

But boss venkat, as he is known, said: ‘We are alert to the pressure that the rising cost of living will have on our customers and colleagues.’