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Barclays Says Sorry As Profit Plunges 71%

(c) Sky News 2012

The boss of Barclays (LSE: BARC.L - news) has apologised for the rate-fixing scandal, as the bank announces a plunge of 71% in statutory profits for the first half of the year.

The bank said the statutory profit before tax to June 30 was £759m, a drop of £1.885bn in 2011, and cited fines and mis-selling compensation as factors in the fall.

Shares in the bank were up more than 9% in late Friday trading.

Its (Euronext: ALITS.NX - news) image has been tarnished in recent months after it was fined £290m by US and UK regulators over fixing of the inter-bank lending rate, or Libor.

Executive chairman Marcus Agius said the scandal had been "challenging" for Barclays.

Mr Agius, who was quizzed by MPs (BSE: MPSLTD.BO - news) at the Treasury Select Committee said: "We are sorry for what has happened because of recent events.

"Our customers and clients are at the heart of what we do.

"I am confident we can and will repair the reputational damage done to our business in their eyes and those of all our stakeholders."

Releasing the figures, Barclays said it had delivered £20.5bn in gross new lending to UK households and businesses.

The bank's board said it remains focused on identifying and recruiting a new chief executive following the departure of Bob Diamond, who resigned amid the scandal.

The embattled banking giant also revealed a potential £450m bill for mis-selling complex financial products to unwitting small businesses.

Barclays was one of four banks which agreed with the Financial Services Authority to compensate customers who were mis-sold interest rate hedging products.

Also known as interest rate swaps, the complicated derivatives products may have been sold to businesses as protection – or to act as a hedge – against a rise in rates without the customer fully grasping the risks.

The bank also revealed that four present and past senior staff, including current group finance director Chris Lucas, were subject to a new investigation by UK regulators into fees they received under deals made in 2008.

Barclays said it also set aside £300m in the first quarter for additional payment protection insurance (PPI) mis-selling to consumers.

The bank has now utilised £894m of its set aside PPI total of £1.3bn.