Earnings

Barclays profit falls, cooperating in forex probe

Barclays Bank
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Barclays on Wednesday reported a 26 percent drop in third-quarter net profit to £1.385 billion ($2.22 billion) as earnings at its investment banking arm dropped sharply.

The group also said it had received enquiries from regulatory and enforcement authorities who are investigating potential manipulation of foreign exchange trading.

"The investigations appear to involve multiple market participants in various countries. Barclays Bank has received enquiries from certain of these authorities related to their particular investigations, is reviewing its foreign exchange trading covering a several year period through August 2013 and is cooperating with the relevant authorities in their investigations," the group said. It added it could not predict the impact of these investigations.

Shares of Barclays were up 3.2 percent in mid-morning trade on Wednesday and Citigroup reiterated its "buy" rating on the stock.

"We view the underlying results as in-line, and expect little change to consensus post these results. However, the progress made on asset reduction should provide some encouragement on Barclays' capital position," Citi analysts Andrew Coombs and Ronit Ghose wrote in a note on Wednesday.

(Read more: Ousted Barclays CEO Bob Diamond on his 'difficult period')

The bank launched a £5.8 billion rights issue earlier this month to meet regulatory requirements.

News of the investigation into possible foreign exchange market manipulation comes as regulators investigate other European banks, Switzerland-based UBS and Germany's Deutsche Bank, for the same allegations.

(Read more: Barclays profit falls, cooperating in forex probe)

Barclays also faces a demand to pay up to $700 million to a U.S. hedge fund after losing a crucial appeal in a five-year legal battle, according to a report by the Financial Times on Wednesday.

Last week, the New York supreme court of appeals overturned an earlier ruling in Barclays favor and found the bank liable for breach of contract over a vast credit derivatives transaction with Black Diamond Capital.

(Read more: Barclays' compliance chief takes leave for stress)

The ruling means the bank must return just under $300 million in withheld collateral to the hedge fund but it could also face a further $300 to $400 million in interest charges and legal costs, the FT learned.

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