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November 15, 2007    

Sub-prime write-down at Barclays

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by Kay Murchie

Barclays, Britain’s third largest bank, said its investment bank unit made a £1.3 billion write-down due to its exposure to credit market problems in the 4 months to the end of October.

Barclays will write down £500 million for the July-September quarter and a further £800 million write-down for October. The write-down was less than many predicted in terms of Barclays’ exposure to problems.

Until today, Barclays had been quiet about the speculation of large write-downs which had made investors anxious. However, following the announcement, the bank’s shares increased, gaining 1 pence in lunch-time trading to 534 pence. The stock has fallen 27% this year.

John Varley, chief executive, said the numbers are rigorous and reassuring. He added that income from commodities, equities and emerging markets had helped absorb the write-downs. For October, Barclays Capital, the securities unit where most exposure to the market turmoil lies, reported the best income levels ever of any fourth-quarter month.

Finally, Robert Diamond, president of Barclays, has guaranteed that there is no further risk of write-downs in residential mortgage-backed collateral debt obligations. October brought a second leg down in the market, and we said let’s take account now of what could come down this year. Mr Diamond concluded that this is clinical and conservative.

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