A further £600 million set aside to cover PPI claims, taking total to £2.6bn
Barclays Bank is setting aside a further £1 billion to pay compensation for mis-selling payment protection insurance (PPI) and interest rate hedging products.
The bank is setting aside another £600 million to cover PPI claims, taking the total so far to £2.6 billion.
A further £400 million is being set aside to cover interest rate swap products which were sold to small to medium sized businesses, taking the total provision to £850 million.
However, it is expected UK banks will only pay out roughly £1.5 billion in compensation for mis-selling interest rate swaps after it emerged the Financial Services Authority included an exemption on compensation for swaps valued at £10 million and above.
Last week, Barclays' new chief executive, Antony Jenkins, said he would waive his bonus for 2012 after a "very difficult" year for the scandal-hit bank.
Also last week the city watchdog announced its findings from a pilot study of 173 interest rate swap sales made by Barclays, HSBC, Royal Bank of Scotland (RBS) and Lloyds Banking Group.
The FSA found more than 90 per cent of the products in the sample had been mis-sold.
Banks sold interest rate derivatives to many of their small business customers as protection from a rise in interest rates.
In many cases banks had insisted upon customers taking out complex interest rate protection as part of wider loan agreement.
These unregulated derivative products were marketed as a no cost insurance against interest rate fluctuations, but many of the contracts have left customers with huge fees and additional penalty clauses when they tried to exit from the products.
The FSA estimates more than 28,000 such products were sold to UK businesses since 2001, but it has so far been unable to put an estimate on what banks' total exposure will be for the mis-selling.
Barclays is also facing allegations it lent Qatar money to invest in its shares in 2008 as part of an emergency cash call to avoid a government bailout.
The terms of the bank's fundraising at the height of the financial crisis are already being scrutinised by the FSA and the Serious Fraud Office.