Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Barclays wealth arm writes to clients over £22m AIG remediation

1 Comment
Barclays wealth arm writes to clients over £22m AIG remediation

Barclays' wealth arm has set aside several million pounds to compensate clients invested in the AIG Enhanced Variable Rate fund.

Some £22 million was chalked up as a 'client remediation provision' in the bank's H1 results, in which Barclays as a group announced a £5.8 billion rights issue while its wealth division posted a 53% drop in pre-tax profit.

Speaking to Wealth Manager, a Barclays spokesperson 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.'

The spokesperson confirmed the remediation is linked to the AIG Enhanced Variable Rates fund, which private bank Coutts was fined £6.3 million for mis-selling in 2011.

Barclays refused to be drawn on whether it too could face a similar penalty, saying it had 'stayed close' to its clients and the regulator over the five years since the credit crisis.

Elsewhere, defaulted Spanish property loans and costs linked to the wider Barclays Transform programme also caused a drag on the wealth division's numbers.

While at a group level the bank announced profit of £3.5 billion, in line with expectations, Barclays' discretionary arm saw its H1 profit slump from £99 million to £47 million, largely due to the increase in its operating costs.

The division shouldered a £33 million share of the bank's £640 million Transform programme bill, though more broadly it saw its total income rise year-on-year, from £875 million at the end of June 2012 to £931 million at the end of June 2013.

This rise was driven by Barclays' high net worth (HNW) client base, the bank said, highlighting that the typical customer asset margin had also risen by 16bps to 81bps, reflecting higher margins on HNW businesses. 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Play Henderson's Hermon: how to be defensive in smaller caps

Henderson's Hermon: how to be defensive in smaller caps

Hermon, who manages the Henderson Smaller Companies trust, talks about he will tackle a 'challenging' 2016.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter