Barclays shares rise on strong balance sheet

| March 27, 2009 | 0 Comments
”Barclays

Shares in Barclays have surged this morning on the news that the Financial Services Authority has given the bank’s balance sheet a clean bill of health, after a stress-test revealed the bank will not need fresh capital, should it sign up to the Government‘s Asset Protection Scheme.

Barclays stock gained 8.4% today to 151.9p and is up 44% this week alone. Meanwhile, according to The Times, Barclays stock is also up due to speculation that the bank is close to selling its iShares business for more than £3 billion.

The Asset Protection Scheme insures against losses arising from toxic assets and Royal Bank of Scotland (RBS), along with Lloyds Banking Group have already signed up. It is hoped the scheme will increase lending and restore confidence in the banking sector.

Barclays recently said it was considering whether to join the scheme but 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.

Last year, Barclays raised £5.3 billion from investors in Qatar and Abu Dhabi, who took a combined stake in the bank of over 30%.

Earlier this month, HSBC confirmed its plans of a £12.5 billion rights issue - the largest ever held in Britain.

Meanwhile, the banking sector performed well on the FTSE 100 today with Lloyds Banking Group 11%, while RBS was up 3%.

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