Reuters
Pre-tax profit rose to $2.8 billion from $2.6 billion a year before, partly due to the restructuring and cost cutting plan CEO Anthony Jenkins instituted in the investment bank after the financial crisis. The plan is working, and these numbers should've been the greatest the bank has seen in years.
But, again, they weren't. Barclays blew it because it had to take a $1.2 billion legal charge from regulators for manipulating foreign exchange rates. That charge is about $461 million more than analysts expected.
What this is telling us is that the "cost of doing business" is costing too much, even for Wall Street.
In the fourth quarter of 2014, weak trading revenue on Wall Street made all the headlines, but legal expenses killed banks across the board too. Here's how that looked:
- Bank of America shelled out $393 million for legal expenses, down from $2.3 billion a year before. That said, in the third quarter the bank shelled out $5.6 billion for legal costs - so there's that.
- JPMorgan's legal expenses held steady for the fourth quarter of 2013 and 2014, roughly hovering at about $1 billion.
- Goldman Sachs fared better, spending $161 million legal expenses in the fourth quarter of 2014, down from $561 million at the same time last year and $194 million the previous quarter.
- Citigroup's legal expenses increased from the same time last year to $3.5 billion from $1 billion. In the third quarter of 2014 the bank spent $1.3 billion on legal expenses.
- Morgan Stanley's legal expenses aren't totally clear. We know only that the bank spent $284 million "for legacy residential mortgage related matters" and that "Non-compensation expenses of $2.8 billion decreased from $4.1 billion a year ago, primarily reflecting lower legal expenses."
Barclays also paid a $230 million fine to customers who bought bad loan payment protection.
That looks like pennies these days though, really.