(emphasis ours)
In view of Barclays recent share price movement, the Board of Barclays has today issued the following statement
The Board of Barclays knows no justification for the fall in the share price. Barclays will announce full results for the year ended 31 December 2008 on 17 February 2009. The Board of Barclays expects to report profit before tax for the year, after reflecting all costs, impairment and market valuations, well ahead of the £5,300m consensus estimate of sell-side analysts. Further, Barclays expects to report a year-end equity tier one capital ratio and tier one capital ratio, on a pro forma basis reflecting the conversion of the Mandatorily Convertible Notes, of approximately 6.5% and 9.5% respectively.
A panic move? Definitely. But then Barclays had to do something – it simply cannot afford to have another session like Friday, when its market value plunged by a quarter.
Will it work? We’ll find out on Monday. But if this story in the Daily Telegraph is correct and Barclays is forced to put assets in to a UK ‘Bad Bank’, the answer could be no.
City sources said last night that the talks over the setting up of a bad bank were “highly complex” and that there was still strong opposition among banks to the Government enforcing a compulsory seizure of their assets.
More controversial will be the position of Barclays and HSBC. Neither bank took cash from the Government as part of the October bail-out, and Barclays instead raised money from a group of Middle Eastern investors.
However, it is believed that they will be forced to join the bad bank so that the entire banking system can be shown to be purged of problematic investments.
Related links:
Barclays seeks to reassure investors – FT.com
What’s rocking Barclays – FT Alphaville