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Search forBarclays' £1bn hit leaves rights issue open
Thursday, May 15, 2008, 15:31
'People may be a bit disappointed that we are saying that we want to keep our options open,' admitted finance director Chris Lucas.
'But the fact is that we don't have to do what some of our competitors have been forced to do. We have complete flexibility, we have the mechanisms and we have the time to get our capital ratios back to our target levels.'
Lucas said the group's two key measures, of tier one capital and tier one equity, were now 'slightly lower' than at the end of December, when they were 7.6% and 5.1% respectively. The bank's target levels are 7.25% and 5.25%.
Rivals have already launched massive rights issues, with Royal Bank of Scotland's £12bn cash call approved by shareholders yesterday and £4bn demand from HBOS to be put to the vote shortly. A £300m rights issue from Bradford & Bingley received a huge raspberry from the City yesterday.
Lucas said: 'We are very clear that we both intend and expect to hit our capital ratio targets in time. We have seen the reaction to other people's fundraisings, and we are happy to keep our range of options open.'
Barclays said that group profits for the first quarter would be 'below that of the very strong prior year period'. Like other banks, it said January and February-had been in line with last year but March had been much worse in investment banking.
Barclays Capital, headed by Bob Diamond, remained in profit in the first three months despite difficult trading conditions and the net credit crunch loss of £1bn.
A further £170m of provisions were made at fund manager Barclays Global Investors, and its profits were lower. But the bank performed strongly in the UK retail and business market. In particular, it has made huge gains in the mortgage market, where its share jumped to 20% in the first quarter from8% in the whole of 2007.
Lucas said the whole market had compressed as some lenders withdrew or cut back. But he emphasised that the bank had only done 'profitable secure business'.
Barclaycard had a strong first quarter with lower bad debts in the UK.
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