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Barclays Faces A Big New Investigation In The US

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Barclays teeBarclays revealed on Wednesday it was facing a possible fine in the US relating to electricity trading and that it was being investigated by the US Department for Justice and US Securities and Exchange Commission.

The news, reported alongside a third-quarter pre-tax loss, led to a sharp fall in Barclay's share price on Wednesday.

On top of the recent scandals to hit Barclays, the bank admitted it could be sanctioned as early as today by the US Federal Energy Regulatory Commission.

It follows an investigation into its power trading operations in the western US between 2006 and 2008. The bank said it would "vigorously defend this matter".

Barclays said the investigation by the DoJ and SEC related to "whether the group's relationships with third parties who assist Barclays to win or retain business are compliant with the US Foreign Corrupt Practices Act".

The bank said it was fully co-operating with the two regulators.

Barclays is already being investigated by Britain's Financial Services Authority and Serious Fraud Office in relation to payments to Qatari investors after it raised funds from the Gulf state at the height of the 2008 financial crisis.

The FSA is investigating the bank and four current and senior employees, including finance director Chris Lucas. It wants to determine whether the lender made adequate disclosure of the fees paid to the Qatar Investment Authority on deals in June and November 2008, when Barclays raised £11.5bn and avoided having to ask the Government for a bail-out.

Barclays declined to comment on whether the US investigation was linked to the same capital raising.

Antony Jenkins, the bank's new chief executive, also revealed that it had fired staff, clawed back pay and taken other disciplinary action after a "very rigorous" internal investigation into the bank's manipulation of Libor interest rates.

"In some circumstances this has led to people being removed from the firm, in some cases it's led to disciplinary action, and along with that there has been a series of compensation actions ... appropriate to individual's involvement," he said.

Mr Jenkins refused to provide more specific details on how many staff it had taken action against. Barclays was fined £290m by US and UK regulators in June for attempting to manipulate Libor.

Barclays report third-quarter loss

Barclays reported a pre-tax loss of £47m for the third quarter after being hit by the cost of charges against the value of its own debt and the a further provision against payment protection insurance compensation.

The loss compares to profit in the same period last year of £2.4bn and a second quarter profit of £1.2bn, and was largely the result of a £1.1bn charge against the value of its own debt as well as the impact of £700m provision for PPI compensation.

Profit on an adjusted basis came in at £1.7bn, in line with City analysts forecasts for the bank.

The new PPI provision was disclosed to the market last week in a profit warning . In total Barclays has now set aside £2bn against PPI claims.

The swing in Barclays' results is in part the result of an controversial accounting rule that requires the bank to take a charge against the value of its own debt.

The results are the first to be presented by Mr Jenkins, who took the top job in August replacing Bob Diamond, who resigned in the wake of the public and political outcry that followed the bank's admission it had attempted to manipulate Libor.

Mr Jenkins said the bank's performance showed it had "good momentum", despite what he described as the recent "difficulties" to strike the business.

"While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned," he said.

Barclays said it bonus pool for the year was currently 10pc smaller than at the same point in 2011 and that it had put aside about £2bn to meet "performance costs".

The bank said the decline would have been greater were it not for the increase in the cost of paying out deferred bonuses from prior years, which grew from £751m at this point in 2011 to £942m this year.

Shares in Barclays dropped 3pc at the start of trading on Wednesday.

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