London: Scandal-hit bank Barclays warned Wednesday that fines over its alleged role in foreign exchange market rigging could top £2.0 billion ($3.1 billion, 2.8 billion euros), after posting plunging first-quarter net profits.
The British lender revealed it has set aside another £800 million for "investigations and litigation primarily relating to foreign exchange", taking the group`s total provision to £2.050 billion.
Media reports meanwhile suggest that Barclays is close to a settlement with global regulators over the alleged rigging of foreign exchange markets.
Barclays -- which was also at the heart of the 2012 Libor interbank interest-rate rigging scandal -- added on Wednesday that it took another provision of £150 million for costs of compensating customers over the mis-selling of payment protection insurance (PPI).
The grim news sent net profits tumbling 52 percent to £465 million in the three months to the end of March compared with a year earlier.
Pretax profit, however, rose nine percent to £1.85 billion on a strong performance from its restructured investment banking division. That was in line with market expectations.
"Resolving legacy conduct issues is... an important part of our plan to transform Barclays," said chief executive Antony Jenkins in the earnings release.
"We are working hard to expedite their settlement and have taken further provisions of £800 million this quarter, primarily relating to foreign exchange.
"While we still have much to do, I am pleased with how we`ve begun 2015."
He added: "The investment bank had a good first quarter representing a performance which is more indicative of the potential of the franchise following the repositioning undertaken last year."
In late morning deals, Barclays` share price dipped 0.75 percent to 259.45 pence on London`s FTSE 100 index, which fell by 1.03 percent.
"The clear fly in the ointment is the additional provisions undertaken for the forex investigation and litigation, as well as the seemingly perennial PPI situation," said analyst Richard Hunter at Hargreaves Lansdown Stockbrokers.
"The fact that these are being made are further proof if it were needed that the bank is still some way from distancing itself from the legacy conduct issues prevalent in the sector."
Back in November, six US and European banks were fined a total of $4.2 billion by regulators for attempting to rig forex markets.
Crucially, however, Barclays was not included in the settlements and remains under investigation.
The bank previously warned that these investigations could result in "substantial" monetary penalties.
Barclays has been reviewing its foreign exchange trading over a period of several years and is continuing to cooperate with relevant bodies.
The hefty fines last year followed a worldwide regulatory probe into the scandal over the $5.3 trillion daily forex market, around 40 percent of which is based in the British capital.
Britain`s HSBC and Royal Bank of Scotland (RBS), US peers Citigroup and JPMorgan Chase, and Swiss lender UBS were all fined by Britain`s Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC).
The FCA found that, between January 20 and October 2013, "ineffective controls" at the five banks allowed their G10 forex traders to put their banks` interests ahead of those of their clients, other market participants and the wider UK financial system.
