The additional provision takes Barclays' total bill for claims to £4.8bn. The bill for the industry as a whole is estimated by consumer body Which? to have already topped more than £20bn.
The scale of the PPI provisions, which the embattled bank blamed on continued claims brought by claims management firms for older policies, came as the bank reported a 7% fall in first half profits to £3.3bn and a near halving in the profits in its once dominant investment bank.
In eight pages of legal warnings attached to its interim results, the bank admitted it was being subjected to additional scrutiny by the US authorities for another year as the Department of Justice was extending the two year non-prosecution agreement (NPA) put in place at the time of its £290m Libor rigging fine in June 2012.
That NPA, which subjects the bank to tough oversight, would have expired last month but has been extended because of the ongoing investigations into alleged foreign exchange manipulation, which much of the industry is facing.
The bank said the agreement with Department of Justice gives the division until 27 June 2015 to decide if any of the bank's trading activities in the foreign exchange market during the two year period from 26 June 2012 constituted a "United States crime" which could leave Barclays open to fresh prosecution over Libor.
However, the decision by the Department of Justice means that the latest allegations facing the bank, brought by the New York attorney general, that it committed fraud will not leave the bank open to prosecution. These allegations by Eric Schneiderman about the way Barclays treated customers in its "dark pool" - a type of private stock exchange - have knocked attempts by Barclays' new boss Antony Jenkins to clean up the bank's image. Barclays, though, is strongly denying the accusations about the activities and other banks, such as Deutsche and UBS, have admitted they too are facing scrutiny of these dark pools which were highlighted in the recent book, Flash Boys: A Wall Street Revolt, by Michael Lewis.
Barclays shares – down a third this year and knocked by the allegations brought by Schneiderman in June – rose 3.1% to 226p, the biggest risers in the FTSE 100 in early trading.
The share price came even as profits in the troublesome investment bank, which is being scaled back with the axing of 19,000 jobs in the coming years, almost halved. Tushar Morzaria, the new finance director, said the investment bank was "pretty much in line" with where the management expected it to be given the restructuring underway.
Jenkins highlighted a cut in costs and said the number of people employed by the bank – 135,000 – was the lowest since before the financial crisis began. 5,000 jobs have gone in the first half of the year.
"Structural cost reduction is vital to achieving strong returns, and we continued to make progress on reducing operating expenses while maintaining controls and improving customer and client experience. Headcount across the Group is now at the lowest level since 2007," he said.
The scaling back of the investment bank was illustrated by a 46% fall in profits in the division, which has been subjected to repeated criticism of its bonus policies in the past. Profits in its African arm were down 12% although profits in Barclaycard rose 24% and its high street banking division rose 23%.
A year ago, Jenkins had to ask investors to back a £6bn cash call to bolster its capital position to meet regulatory requirements set out by the Bank of England.
The legal disclosures repeat that the bank is fighting a £50m fine from the Financial Conduct Authority for disclosures it made at the time of cash calls during 2008 but that this process has been stalled by an on-going investigation by the Serious Fraud Office.
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