Barclays could face extra £1.2bn in legal costs and fines

Eric Schneiderman, the New York Attorney General, brought the charges last month, claiming that the bank was engaging in a “flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public”.

Barclays said the suit is based on “clear and factual errors”, and is fighting to have the case thrown out of court.

Meanwhile, it also faces a further £700m charge to deal with the fallout from an industry-wide investigation into manipulation of the $5.3 trillion-a-day currency trading market.

“Anecdotal evidence suggests both these could be done by the end of the year,” Mr Barua said.

He also said he expected Barclays to take a £300m charge in the second half of the year to compensate customers who were mis-sold products to help them hedge interest rates.

The spiralling costs come as a blow to Barclays, which has struggled to recover its reputation since the Libor scandal erupted in 2012. The bank was forced to pay $450m in penalties to regulators on both sides of the Atlantic to settle charges that it fixed the London interbank offered rate, which is used as a global benchmark for setting interest on loans and mortgages.

Barclays’ chief executive, Antony Jenkins, said last month that it was working fast to settle outstanding legal matters and put legacy issues behind it.

“Where there is a case to answer, we will take responsibility, accept the sanctions, learn the lessons and move on," he said. "I will not tolerate behaviour that is inconsistent with our purpose and values.”

more