Barclays: £500m Not Enough To Settle Claims

The £500m that Barclays (LSE: BARC.L - news) has set aside to settle allegations that its traders helped rig foreign exchange markets is not going to be enough, the bank's chief executive has told Sky News.

Barclays surprised the City when, last month, it did not take part in a deal in which six banks, including HSBC, Royal Bank of Scotland (LSE: RBS.L - news) and JP Morgan Chase, were fined a total of £2.7bn by British and American regulators to settle allegations of currency rigging.

The bank has set aside £500m to settle the claims but, asked whether that would be enough, Antony Jenkins said: "My expectation is it will be a bigger number than that."

Mr Jenkins said that, while ongoing regulatory issues were difficult to comment on, Barclays hoped to reach a settlement with regulators "in the course of next year".

The foreign exchange rigging claim is just one of a number of 'legacy' issues to have hampered the Barclays chief executive as he seeks to steer the bank away from the controversial era of his predecessor, Bob Diamond, which was characterised by a dramatic expansion of the group's investment banking division.

However, Mr Jenkins said he felt progress was being made in changing the culture at Barclays, despite a recent claim from Mark Carney, the Governor of the Bank of England, that the problem with the banking system was not so much a few bad apples but with the barrels in which they were stored.

Mr Jenkins added: "You've got to have a robust culture which defines what the company is about. Just as in this country we have laws, and people obey those laws mostly because it's the right thing to do, sometimes you have situations where people don't obey the law and you need a policing function - in a bank, that's called the compliance department.

"Banks didn't have strong enough compliance departments. We've moved to strengthen ours. As I've always said, changing culture takes time. We're making progress - the industry has come a long way on both topics but we have work to do."

With the banking bonus season about to begin, Mr Jenkins said he expected Barclays - which under Mr Diamond paid some of the biggest bonuses in the sector - to attract fewer headlines this time around.

He added: "I don't think it [the bonus season] will be as controversial. We're very clear at Barclays: we pay for performance and we want to pay competitively. If a business performs, we'll pay; if it doesn't, we'll pay accordingly. It'll be much less controversial."

Shares (Berlin: DI6.BE - news) of Barclays have been among the worst performers in the banking sector, having fallen by almost 17%, a fall beaten only by that suffered by Standard Chartered (Other OTC: SCBFF - news) .

However, Mr Jenkins argued that there were lots of factors that drive share price: "Let me tell you what my investors are telling me. I talk to them all the time - they're very supportive of the strategy."

Looking ahead to next year, Mr Jenkins said Barclays was a "massively different" organisation now from the one he inherited when he became chief executive just over two years ago.

He said: "Our capital position is almost 50% stronger, our leverage is 50% better, the culture is changing, we are leading the way in the deployment of new technology, which is very important for our future, while our business model is simpler much less dependent on investment banking. We are in a very good place for 2015."