Barclays opts out of Government’s Asset Protection Scheme

| March 30, 2009 | 0 Comments

Barclays has confirmed it will not sign up to the Government’s Asset Protection Scheme.

Royal Bank of Scotland, along with Lloyds Banking Group have already signed up to the scheme, which insures against losses arising from toxic assets. The two banks will insure nearly £600 billion worth of toxic debts as part of the scheme.

It is hoped the scheme will increase lending and restore confidence in the banking sector, as well as cleaning up balance sheets.

Returning to Barclays, the bank shunned the scheme, citing it would not be in the interest of investors, depositors and clients.

Unlike many other UK banks, Barclays has so far rejected Government help and last year, the bank raised £5.3 billion from investors in Qatar and Abu Dhabi, who took a combined stake in the bank of over 30%.

However, many analysts believe the bank will look at tapping investors for cash to give it further capital to see it through the economic downturn. Some analysts think the bank will need up to £8 billion.

However, there is also speculation that the bank is close to selling its iShares business for more than £3 billion.

The news follows on from the bank’s stress-test last week, which saw the Financial Services Authority give the bank’s balance sheet a clean bill of health.

John Varley, the bank’s chief executive, said “Barclays continues to manage its balance sheet and capital position actively“.

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