Reporting to shareholders, the bank said that versus 2012 its wealth arm has seen its profit before tax fall substantially, with the decline in profit to £54m “primarily driven” by the cost of its Transform programme, a strategy aimed at revamping the bank’s image following last year’s Libor storm.
Compared to quarter two, profits in the division were up, however, lending some cheer to the results. Barclays Wealth posted a profit before tax of £7m for quarter three, compared to a loss of £13m for the previous three months.
AIG
Elsewhere, in its previous investor updates, Barclays’ wealth arm said that it had created a £22m provision in order to compensate clients invested in the suspended AIG Variable Rate Fund.
Its profit before tax rose in quarter three because these expenses were not repeated. The benefit of this was partially offset, however, because the wealth division had shouldered £11m of additional costs linked to the Transform scheme.
The cost of Barclays’ image overhaul now stands at £44m, it said.
Another probe
In the wider business, Barclays admitted that it was involved in an investigation over the manipulation of currency prices, and told investors that the group overall had suffered a 26% fall in its quarterly pre-tax profit.
Again, Barclays said the decline in adjusted profit to £4.9bn was linked to the £741m cost of Transform for the group as a whole, though a drop in the investment banking division’s income from fixed income, commodities and currency also played a part.
Antony Jenkins, the bank’s chief executive, said there was clear evidence of “growing momentum” surrounding Transform, both in terms of a reduction in the bank’s risk-weighted assets and tighter cost controls, which it expects to feel the benefit of in 2014.
Jenkins did not touch on the fresh investigation over possible currency price manipulation, however in the results the bank admitted it was facing international scrutiny over currency trading.
