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£1bn write-down at Barclays

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by Kay Mitchell

Barclays, the UK’s third largest bank, has announced it has taken a further £1 billion write-down in credit crunch related debt but added that the business was profitable in spite of challenging trading conditions.

However, unlike some of its rivals, it has not asked its investors for additional cash through a rights issue.

Rights issues from other UK banks include Bradford & Bingley, HBOS and Royal Bank of Scotland and HBOS who are looking to raise £300 million, £4 billion and £12 billion respectively.

Banks are keen to raise capital as they are still suffering from the impact of the credit crisis.

The Bank of England’s latest inflation report portrayed a gloomy picture for the UK’s economic prospects so UK banks are also keen to prepare against falling demand for their services.

Hargreaves Lansdown Stockbrokers said Barclays was keeping its options open and added that the bank’s statement does little to assuage any concerns regarding the likelihood of a rights issue, with the company insisting on keeping the door open.

Barclays added that its Barclaycard arm had shown very strong profit growth, the UK retail and commercial banking business performed well and mortgage volumes were considerably higher than last year.

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News posted: May 15, 2008

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