Barclays sorry for Libor as profits rise above expectations

A 4 billion pound profit overshadows some of the damage caused by an interest rate rigging scandal

British bank Barclays Plc said it was confident it will repair the damage caused by an interest rate rigging scandal that has rocked it and the banking industry after beating expectations with a 4 billion pound profit.

"We are sorry for the issues that have emerged over recent weeks and recognise that we have disappointed our customers and shareholders," Chairman Marcus Agius said.

"I am confident we can, and will, repair the reputational damage done to our business in their eyes and those of all our stakeholders," Agius said, reaffirming a commitment to deliver a return on equity of 13 percent.

Barclays reported an underlying pretax profit of 4.2 billion pounds for the six months to the end of June, above an average forecast of 3.8 billion pounds from analysts polled by the company and up 13 percent from a year ago.

The bank is searching for a new chief executive and chairman after they quit in the wake of a record 290 million pound fine last month for rigging the Libor interest rate benchmark, sparking fierce criticism about its culture and risk-taking.

Agius said the board was focused on filling those positions, but gave no update on likely timing.

Barclays' investment bank fared better than most rivals in a tough second quarter, with income of 3 billion pounds up 5 percent from a year ago and down 12 percent on the first quarter.

But the bank is reviewing all parts of its investment bank, people familiar with the matter said, and the Libor scandal has intensified calls for it to shrink the business.

The bank also said it faces a bill of 450 million pounds to pay compensation to customers misled about interest rate hedging products to small businesses. The figure is based on initial estimates and Barclays said the ultimate cost is uncertain.

Britain's financial regulator said in June banks had agreed to pay compensation to customers who were misled about the products.

Barclays said its statutory profits fell 71 percent to 759 million pounds including the fine, interest rate mis-selling charge and movement in the value of its own debt.