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July 31, 2013updated 04 Apr 2017 3:01pm

Barclays Wealth second quarter loss linked to £22m AIG fund pay back

The UK's Barclays Bank reported a £13 million (US$19.9 million) pre-tax adjusted loss for the second quarter of 2013 at their wealth and investment management arm. The loss was been put down to a combination of credit impairment costs, the cost of its Transform programme and a £22 million 'customer remediation provision.'

By Mike Cobb

The UK’s Barclays Bank reported a £13 million (US$19.9 million) pre-tax adjusted loss for the second quarter of 2013 at their wealth and investment management arm.

The loss was been put down to a combination of credit impairment costs, the cost of its Transform programme and a £22 million ‘customer remediation provision.’

The customer remediation provisions were set aside to repay customers of the AIG Enhanced Variable Rates fund. UBS and Coutts were fined $14.7 million and $9.8 million respectively by the former UK regulator, the Financial Services Authority (FSA), for misselling the same AIG fund.

Commenting on the provision a spokesman for Barclays said: "[The provision ] relates to a small number of clients who were invested in a product that didn’t perform as it should have done over the course of the financial crisis.

"We have taken the view that where appropriate we should reinstate them to the position they’d have been in had they been invested in cash. We are in the course of writing to clients to let them know our plans."

FCA won’t pursue Barclays fine

It is understood that the FSA’s successor, the Financial Conduct Authority, will not pursue an investigation into Barclays and the AIG Enhanced Variable Rates fund.

The provision comes on top of the costs of the Transform programme and the continuing losses brought on by Spanish property loan defaults.

The second quarter loss compares to a pre-tax adjusted profit for the same quarter in 2012 of £49 million and took the pre-tax half year profits for the arm fall by 53% to £47 million in the half year to 30 June 2013.

The poor result disguises an otherwise good year for Barclays’ wealth and investment arm.

Assets under management rose above £202 million ($310.7 million) for the first time. The group also saw a 4% growth in operating income up from £875 million to £931 million in the year to date.

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