Barclays Bank Error In Your Favour - Collect £100M

I see that Barclays is fond of playing Monopoly, and has managed to create a bank error (for once in its customers' favour) that will entail a refund to affected customers (estimated at being around 300,000) of around £100M.

Barclays customers are to receive compensation because it miscalculated the interest owed on personal loans, the errors date back to October 2008.

Other divisions (Barclaycard, Barclays Wealth and Barclays Corporate) are now undertaking a review to see if customers were short-changed by the errors ("technical documentary errors").

Barclays will write to customers in the coming weeks. Barclays is quoted by the Telegraph saying that said it had "identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts. It is therefore implementing a plan to return interest incorrectly charged to customers".

A spokesman for the bank said:

"Barclays has proactively reviewed information it has historically sent to its customers relating to interest charges, where we have found technical documentary errors. As a result Barclays has identified certain issues with the information contained in some statements and arrears notices relating to consumer loan accounts. 

Due to these notification errors, interest was not due on certain accounts during the period that Barclays made this mistake, and whilst no one has been mis-sold to, customers are entitled to have their interest payments returned. No customer will pay more than they were ever contractually expected to. 

Barclays has notified the Office of Fair Trading (OFT), which is responsible for consumer credit issues, and is implementing a plan to return interest payments to customers as swiftly and efficiently as possible. Barclays is undertaking a review of all its businesses where similar issues could arise to assess any related issues. 

Any affected customer will be contacted by Barclays and customers do not need to take any action."

To add to Barclays shame, campaign group Move Your Money said that Barclays was the lowest scoring financial institution out of 70 assessed, scoring four out of 100 possible points for honesty and customer service.

Well done Barclays!

Barclays £12.8BN Hole

Barclays has gone cap in hand to its shareholders today for £5.8BN via a rights issue, in order to help it plug a £12.8BN capital shortfall arising from the new Prudential Regulation Authority (PRA) imposed safety buffer.

The Telegraph reports that rights issue will allow existing investors to buy one new share for every four they currently own at a price of 185p, a discount of 40% to they bank's closing share price yesterday. 

Barclays will also issue £2BN of bonds that are turned into shares or wiped out if the bank gets into trouble.

Additionally in its six months results for the first half of this year, Barclays has set aside £1.35BN against further PPI claims, bringing its total compensation fund to just under £4BN, and a further £650M for interest rate swap redress, increasing its provision to £1.5BN.

Barclays chief executive Antony Jenkins is quoted by the BBC, in a dig at the PRA, warns that plugging the hole will have a negative impact on the economy:

"It means Barclays will provide fewer financial transactions to big companies, life insurers and pension funds, inter alia, to help those giant institutions reduce their risks. And to be clear that will represent a tightening of credit for those customers, so there may be a negative economic impact."

Barclays share price is currently down 7% on the day.