* Takes another 600 mln stg provision for PPI compensation
* Adds 400 mln stg to interest rate swaps provision
* Signals rival UK banks need to set aside more cash
* Says cannot comment on Qatar fundraising investigation
By Steve Slater and Matt Scuffham
LONDON, Feb 5 (Reuters) - Barclays bosses duckedquestions on Tuesday over funding for its rescue by Qatar fouryears ago, as another big charge for mis-selling showed how pastproblems continue to dog the British bank.
UK authorities have been investigating the bank'sfundraising from Qatar at the height of the 2008 financialcrisis since July. The Financial Times reported last week thatthey were looking into whether Barclays had lent Qatar money tobuy shares in the bank itself.
Asked by UK lawmakers if there was anything linked to theQatar fundraising that could cause embarrassment in the future,Barclays Chairman David Walker told a parliamentary inquiry that he could not comment due to the investigation.
Earlier, the bank said it had set aside a further 1 billionpounds ($1.6 billion), including an extra 600 million tocompensate customers for payment protection insurance. PPImis-selling alone has now cost UK banks over 12 billion andcould end up more than double that, industry sources estimate.
Unlike RBS and Lloyds, which had to takegovernment bailouts during the crisis, Barclays avoided a rescuefunded by British taxpayers after Qatar bought its stake.
However, the wider banking industry has come under fire fora series of scandals including the mis-selling of financialproducts to clients who did not need or could not use them, andover the rigging of a major interest rate. This, along withpublic anger at big bonus payments, has put the spotlight on theculture of bankers before, during and since the crisis.
Walker and new Chief Executive Antony Jenkins said they wereconfident they can improve the Barclays culture by reforming paystructures and putting greater focus on ethics.
"We have learned lessons during this phase and I doseriously believe we'll be different," Walker told theparliamentary inquiry into standards in banking.
Jenkins said bonus awards for last year would be cut due tothe past problems. "We have adjusted our pools substantiallythis year to reflect the events of 2012," he said.
However, lawmakers were sceptical. "It doesn't seem tomatter what the scandal is, Barclays seems to have a finger ineach pie, quite a big one," said Andrew Tyrie, the inquiry'schairman.
The UK banking inquiry was launched after Barclays was fined$450 million last June for rigging Libor interest rates, but thePPI scandal has shown its problems have also been in retailbanking, the area that Jenkins used to run.
FOURTH PROVISION
Tuesday's announcement marked Barclays' fourth provision forPPI, dating back to May 2011 when the industry lost a court caseon mis-selling. It has now set aside 2.6 billion pounds tosettle claims for over PPI - loan insurance to protect borrowerswho miss repayments due to illness or redundancy, but which wasoften sold to people who were not eligible to claim.
Barclays also set aside 400 million pounds more to coverclaims for mis-selling interest rate hedging products (IRHP),almost doubling its provision to 850 million and firing awarning shot that other banks face big bills too.
Britain's financial regulator said last week that a pilotstudy showed banks had mis-sold complex interest-rate hedgingproducts to small businesses which did not need them or did notunderstand the risks involved, opening the door for billions ofpounds in payouts.
"This (Barclays' provision) is by far the highest among UKbanks and suggests further provisions by RBS, Lloyds and HSBC," said Shailesh Raikundlia, analyst at Espirito Santo.
Barclays said it had paid out only 36 million pounds on IRHPby the end of last year. It had about 5,000 IRHP policies.
By 1212 GMT Barclays shares were up 1.6 percent at 296pence, in line with the European bank index.
REVIVAL STUCK
Jenkins, who took over as CEO in August when his predecessorBob Diamond was ousted over the Libor fine, is attempting torevive Barclays after the string of scandals and has promised toimprove culture and standards across the bank.
But he said last week he would not take a bonus for 2012,saying he should "bear an appropriate degree of accountability"for the difficult year the bank endured.
He has warned that his turnaround plan, to be unveiled onFeb. 12, could take 5-10 years to fulfill.
PPI has developed into the biggest ever mis-selling scandalfor UK banks, who are trying to set a time limit for whencustomers can claim to draw a line under the payouts.
Barclays said it had paid out 1.6 billion in compensation bythe end of December, or 62 percent of its provision.
Last month, the head of Britain's Financial OmbudsmanService said banks only had themselves to blame for thespiralling costs of the scandal, which she said could have beencontained if they had addressed the issue earlier.
The ombudsman service, which steps in when banks and theircustomers cannot reach an agreement on compensation, said it wasreceiving up to 10,000 complaints each week about PPI and hashired 1,000 new staff to cope with the caseload.
Barclays (BARC)
