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Friday 05th of December 2008
April 24, 2008

Barclays admit trading conditions are tough


by Kay Murchie
”Barclays

Britain’s third-largest bank, Barclays, said financial markets were tough last month and, as a result, profits fell in the first quarter.

The bank posted profit of £7 billion for last year, this represented a 1% fall compared with the previous year.

Chief executive, John Varley, said results at Barclays Capital and Barclays Global Investors were well below the strong profits of last year but were still profitable.

Mr Varley added that the second half of 2007 was as hard a six-month period as he can remember and conditions in some markets in 2008 have remained difficult.

The chief executive added that the bank is aiming to generate economic profit of between £9.3 billion and £10.6 billion over the next 4 years.

Mr Varley’s comments came shortly before the bank’s AGM.

There are rumours that Barclays may be forced to commence a rights issue to improve its financial position. However, Mr Varley did not comment on this matter.

Earlier this week, RBS (RBS), Britain’s second largest bank, confirmed it was preparing to raise billions of pounds through a rights issue.

RBS said it needed to shore up its balance sheet and a rights issue was the best action to take.

According to analysts at Wall Street bank, JP Morgan, Britain’s four biggest lenders (RBS, HBOS, Barclays and Lloyds TSB) are facing a combined funding shortfall of £37 billion.

Other analysts believe British lenders will follow RBS’ lead and ask shareholders for cash to help them deal with losses which have arisen from the US sub-prime mortgage crisis.

In early morning trading today, Barclays shares were down 2% at 446.25.

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