AEY.L Share News (AEY)

LONDON (Alliance News) - Barclays shares are higher Monday despite the bank confirming that its 2013 pretax profit excluding provisions will drop by over GBP2 billion and as it launched a probe into allegations that details of tens of thousands of its account holders have been stolen and sold on.

The bank put out its 2013 pretax profit figures a day ahead of its full earnings release after the Financial Times put out an earnings forecast that was close enough to the actual figures to force the bank to update the market as required under strict stock market rules.

It said it will report an adjusted pretax profit of GBP5.2 billion for 2013, or GBP2.9 billion including provisions including the impact of its own credit, gains on debt buybacks, and gains and losses on acquisitions and disposals. It had reported an adjusted profit of GBP7.60 billion in 2012, while its pretax profit including provisions was GBP797 million. The adjusted figure is watched closely by the markets as it gives a better picture of the bank's operating performance.

The company had Friday provided a consensus forecast of GBP5.41 billion for its adjusted pretax profit, suggesting that the actual figure was below forecasts. However, Shore Capital analyst Gary Greenwood called the consensus estimate a "nonsense," saying that it has not been adjusted to take into account an additional GBP330 million charge Barclays announced last month to cover the costs of litigation and financial penalties at its investment bank.

Barclays shares were up 1.7% midday Monday.

The update came after a difficult weekend for Barclays, with the Mail on Sunday reporting that up to 27,000 files containing sensitive information and data relating to the bank's customers had been stolen and sold. The files are said to include health and financial information as well as passport and national insurance numbers and were reportedly sold on to rogue traders.

Barclays has since launched an investigation into the report. "It looks as though this was a criminal act," a spokesperson said. "We are cooperating with the authorities in order to find the person responsible."

Centrica is the biggest faller on the FTSE 100 Monday, while SSE is also among the biggest fallers, after the BBC reported that UK Energy Secretary Ed Davey wrote a letter to energy regulators claiming that the profit margins made by the big six energy firms in the UK when supplying gas are much higher than previously thought.

In the letter, Davey criticised profit margins mainly at British Gas, a Centrica subsidiary, stating that its profit margin is one of the industry's highest and, with 41% of the market, it has the largest share.

As a result, Davey has now asked the UK competition authorities, which are currently reviewing the cost of energy and transparency at the big six energy companies, to also investigate the profit margins at these companies. According to the BBC, Davey has written to energy regulator Ofgem and other authorities asking them to consider all possible options including "a break-up of any companies found to have monopoly power to the detriment of the consumer."

In political news, French President Francois Hollande has arrived in Washington for his state visit. He and US President Barack Obama said their countries' ties should be used as "a model" for the world in a joint opinion article. Relations had been "transformed" in recent years, they said, citing as examples their success in obtaining an interim nuclear deal with Iran and their joint threat last year to strike Syria, which resulted in Damascus agreeing to give up chemical weapons. Africa was perhaps the most vivid example of their new partnership, they wrote.

In Africa, South Sudan's warring parties are set to resume peace negotiations in Ethiopia's capital, Addis Ababa, after talks stalled for two weeks. A power struggle between President Salva Kiir and his former deputy Riek Machar turned violent in mid-December when clashes erupted between their respective ethnic groups, the Dinka and the Nuer. No firm agenda has been set for the second round of talks which are scheduled to begin at 1400 GMT.

In the Middle East, Iran has agreed a first step towards an International Atomic Energy Agency probe of alleged nuclear arms projects, by promising information about detonators that could be used in such weapons, the Islamic Republic and the IAEA said. The IAEA has tried for more than two years to start such an investigation.

Syrian government and opposition representatives are expected to begin a second round of peace talks in Geneva without meeting face to face. Diplomatic sources in the Swiss city said Lakhdar Brahimi would chair separate sessions with the two delegations on the first two days of the resumed talks, with joint sessions not likely to take place until Wednesday. After pressure from Russia, Brahimi is expected to start discussions around the issues of terrorism, a potential ceasefire and humanitarian issues, the sources said.

While those talks go on in Switzerland, the country itself has drawn the wrath of EU officials after it took a decision to curb labour immigration, in breach of its agreements with the EU, after a referendum on the issue won a narrow majority. French Foreign Minister Laurent Fabius said the EU would have to review its relations with its Alpine neighbour. "In my opinion it's bad news both for Europe and the Swiss, because Switzerland is turning inwards. It will penalize them," he said.

Meanwhile, EU foreign ministers are meeting Monday and are set to discuss efforts to help Ukraine out of its political crisis, possible EU troop deployments to the Central African Republic and closer ties with Cuba.

The EU has engaged in increased diplomatic activity with Kiev, after Ukrainian President Viktor Yanukovych backed away from an association deal with the bloc in November in favour of closer ties to Russia. In light of continuing political violence, the ministers' meeting in Brussels is likely to tackle possible sanctions on the Ukrainian government. Those could include travel restrictions and asset freezes against key individuals, although EU sources say such measures are not likely at this stage.

The People's Bank of China said it will use all tools including the reserve requirement ratio to ensure appropriate liquidity in the banking system. In a quarterly monetary policy report, the PBoC said it will strengthen oversight of local government debt and monitor credit default dangers in local-government financing vehicles.

The head of Italy's central bank has called for "more ambitious" action to help local lenders get rid of rising bad loans, a major problem for the eurozone's third-largest economy. Governor Ignazio Visco's remarks were seen as supporting the creation of so-called "bad banks", separate financial institutions where banks can park their troubled assets and so clean up their balance sheets.

Thai police have arrested one of the leaders of the anti-government protests that have occupied parts of Bangkok for the past three months. Sonthiyarn Chuenruethainaitham, the owner of a local satellite TV news agency, was arrested at a Bangkok shopping mall on charges of violating a state of emergency in the capital, police said.

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FTSE 100: up 0.03% at 6,573.44
FTSE 250: up 0.1% at 15,879.07
AIM ALL-SHARE: up 0.4% at 866.45
GBP-USD: 1.6389
EUR-USD: 1.3633
GOLD: USD1,273.23 an ounce
OIL (Brent): USD109.41 a barrel

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KEY UK CORPORATE NEWS:

FTSE 250: Essar Energy said that its Essar Oil subsidiary increased revenues and profits in its third quarter, despite the planned shutdown of its Vadinar Refinery. Millennium & Copthorne Hotels has agreed to acquire the Novotel New York Times Square for USD273.6 million. The Novotel building contains a four star hotel, office and retail space and a penthouse apartment. Catlin Group said strong underwriting discipline and diversification were behind a 27% increase in pretax profits for its recent financial year, while it welcomed increasing levels of competition as the insurance market softens and more capital enters the industry. Management indicated to analysts that it might consider a capital return to shareholders if 2014 also meets expectations. Cable & Wireless Communications has started looking for a new chief financial officer because Tim Pennington will step down from the role February 11 before taking up the same role at another company. Pennington will "remain available" to C&W until after the company reports its full-year results in June.

AIM: Shares in Sigma Capital Group are up after the firm said it has agreed to acquire its first London site for its private rented sector residential portfolio through a deal with Barking Riverside, a joint venture company between Greater London Authority and Bellway Homes. The financial terms of the deal have not been disclosed. Rare Earth Minerals shares are up after it said its stage-two drilling at the Fleur-El Sauz Lithium Project in Mexico is now complete and plans are moving forward with the development of the site. The successful drilling has meant that its rig will remain on site for an infill drilling programme in the southern portion of the Sauz claim, it said. Active Energy Group shares are doing well after it achieved a third Turkish woodchip supply contract and has entered into a new port and logistics operations agreement. Antrim Energy shares are also up in the wake of Friday's late announcement of a deal First Oil Expro to buy its UK subsidiary, Antrim Resources, for USD53 million in cash. Pentagon Protection shares are down after the firm said it anticipates results "materially" ahead of expectations for the year ended September 30 2013, but it also warned that trading in the current year is below budget so far. The company warned that its short term working capital may be hit as it is uncertain when projects in its sales pipeline would be converted into orders.

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AFTERNOON WATCHLIST: US Monthly Budget Statement

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Tuesday's Key UK Corporate Events

Barclays Full Year Results
Glencore Xstrata Interim Management Statement
Babcock Interim Management Statement
McBride Interim Results
Dunelm Half Year Results
Bellway Trading update
Thomas Cook Group Interim Management Statement
Cable & Wireless Communications Interim Management Statement
Hargreaves Services Interim Results

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Tuesday's Key Economic Events

All Day Japan National Foundation Day
00:01 UK BRC Retail Sales Monitor
12:30 US NFIB Business Optimism Index
13:55 US Redbook index
14:30 US Philadelphia Fed's Plosser speech
15:00 US Fed's Yellen Speech
15:00 US Wholesale Inventories
23:50 Japan Gross Domestic Product Annualized Preliminary
23:50 Japan Machinery Orders

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By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance

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