Barclays profits slump after £2bn hit from trading error

BARCLAYS’ profits halved in the first six months of this year after a trading error cost it £1.9bn.

Profits slumped by 48pc to £1.1bn following the costly misstep at its investment banking unit.

In March, it was revealed that the bank had accidentally sold $17.6bn (£14.5bn) more in securities than was permitted by US regulators.

The blunder forced Barclays to buy back notes from customers at a spiralling cost. The rising value of the dollar has added £1.7bn to the cost of fixing its error, originally estimated at £16.7bn.

The bank also set aside £165m to cover possible penalties from the US Securities and Exchange Commission.

Barclays clawed back some of the loss

‘Litigation costs continue to be an issue for Barclays and are becoming a familiar theme for quarterly updates’

through hedging. The bank made £758m, leaving the net cost of the issue at £580m in the quarter.

The blunder has cast a shadow over chief executive CS Venkatakrishnan’s first few months in the job. He replaced Jes Staley in November 2021 after Mr Staley was forced to resign last year after revelations about his close relationship with the deceased financier and sex offender Jeffrey Epstein.

Barclays is also wrestling with a number of other compliance headaches, including US regulatory investigations into staff using personal phones at work. The SEC has announced a crackdown on bankers speaking with clients over messaging platforms, such as Whatsapp. Barclays has earmarked an additional £200m for potential fines arising from this investigation.

“Litigation costs continue to be an issue for Barclays and are becoming a familiar theme for quarterly updates,” said John Moore, senior investment manager at Brewin Dolphin.