Barclays has been hit by UK government ring-fencing requirements Reuters

Barclays has been forced to lower its cost-cutting targets and return on equity expectations as the bank put aside £1.1bn ($1.67bn, €1.5bn) to cope with the ring-fencing of its internal businesses, as required by UK law.

Barclays, which has just announced the arrival of new chief executive officer Jes Stanley, reported third quarter pre-tax profits of £1.43bn for the three months to September 30, down from £1.59bn a year ago.

The ring-fencing of big UK lenders to protect retail operations from the investment banking side of their businesses is to be completed by 2019.

Barclays has earmarked £100m for ring-fencing this year, £400m to restructure internal operations in 2016, with a further £500m post-2016.

This has led to the bank lifting its guidance for core costs to £14.9bn from £14.5bn. Barclays has also cut its 2016 return on equity from 12% to 11%.

Barclays was also forced to set aside £290m provision relating to certain forex transactions, £270m to deal with mortgage securities litigation in the US, and it booked a £201m loss on the sale of its Portuguese retail banking business.

John McFarlane, chairman of Barclays, said: "As we align Barclays around three priorities — focus on core (segments and markets), generating shareholder value, and instilling a high performance culture with strong ethical values — we now have a forward agenda that has been discussed and agreed with Mr Stanley."