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Barclays bank set aside another £1.0 billion on Tuesday to cover compensation for mis-selling credit insurance and interest rate hedging products, adding to its problems after the Libor rate-rigging crisis.
The British bank has decided to increase its provisions by the equivalent of $1.6 billion or 1.2 billion euros following a review.
Barclays said in a statement that it had decided to put aside a further £600 million for the mis-selling of payment protection insurance (PPI), taking the total bill to £2.6 billion.
In addition, Barclays also increased its provision for the mis-selling of interest rate hedging products (IRHP) to small businesses by £400 million to a total of £850 million, adding it would keep the amount under review.
"Following the outcome of its pilot review of IRHP sold to small and medium-sized enterprises, and the FSA's report on this review and those conducted by a number of other banks, Barclays has increased its provision for IRHP redress by £400 million," it said.
"The main review and redress exercise will commence shortly and the appropriate provision level will be kept under ongoing review as it progresses."
Barclays made the announcement ahead of its 2013 results statement which is due on February 12.
The Financial Services Authority regulator has warned of "significant" mis-selling of interest rate hedging products to small businesses, and has ordered the country's major banks to review all their sales, paving the way for a new wave of compensation claims.
On PPI meanwhile, Britain's banks have set aside about £11 billion in provisions. PPI covers repayments on credit products such as consumer loans or mortgages.
Investors took Tuesday's news in their stride, with Barclays' share price rising 0.53 percent to 293.05 pence on London's FTSE 100 index, which was 0.30 percent higher in late morning deals.
Barclays chief executive Antony Jenkins had announced last Friday that he would give up his 2012 bonus after a "very difficult year" that was marred by the Libor affair.
The bank slumped into crisis last June when it was fined £290 million by British and US regulators for attempted manipulation of Libor and Euribor interbank rates between 2005 and 2009.
The Libor system was found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.
The FSA had meanwhile raised its concerns last year about the sale of complex products by banks to small businesses to help protect them against the risks of changing interest rates.
While IRHPs are useful tools in financial planning, the FSA warned that many small firms did not understand what they were being sold and banks were often driven more by incentives than by good practice.