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Barclays rules out govt help, says doing well
2009-03-30
LONDON (AFP) - British bank Barclays said Monday that it will not take part in a government insurance scheme for risky assets that could have led to the lender's partial nationalisation. The group added in a bullish statement that it has enjoyed a "strong" trading performance so far this year despite the ongoing credit crunch and a deep recession in Britain. "Barclays has continued to assess the potential benefits and costs of participation in (the) Treasury's Asset Protection Scheme (APS)," Barclays said in a statement to the London Stock Exchange. "Following further careful assessment and discussions with major shareholders, the board of Barclays has determined that it would not be in the interests of its investors, depositors and clients to participate in the APS." The bank had said last week that it was negotiating with the government on the plan which provides guarantees for toxic or high-risk assets which have burdened the banks' balance sheets cut lending. It was facing a Tuesday deadline to decide whether to join. The British state could end up owning as much as 75 percent of rival firms Royal Bank of Scotland (RBS) and Lloyds Banking Group (LBG) after both agreed earlier this year to participate in APS. Barclays has previously spurned British government bailout funds and has fared better than many of its British banking rivals in the current global financial crisis. Instead of taking government funds, last year it secured additional capital from investors in Abu Dhabi and Qatar in order to bolster its finances. Before the weekend, meanwhile, the Financial Services Authority gave Barclays' finances the all-clear after the bank passed a so-called "stress test" designed to see if it could weather a sharp downturn. "The trading performance of the Barclays Group in 2009 continues to be strong," Barclays said on Monday. In addition, it said that talks were "progressing well" over the sale of its asset management business iShares. "Barclays is discussing the potential sale of its iShares business with a number of interested parties. These discussions are progressing well." The bank put the unit up for sale before the weekend, helping its share price rocket by almost one quarter in value on Friday. Barclays' share price fell Monday by 14.21 percent to 149.10 pence on London's FTSE 100 index of leading shares, which closed 3.49 percent lower at 3,762.91 points. "In making our judgement about the Asset Protection Scheme, we have looked carefully at the economics of participation and we have talked to many investors," Barclays Chief Executive John Varley said in the statement. "This has led us to today's decision." Rival banks RBS and LBG have placed 325 billion pounds and 260 billion pounds of risky investments respectively into the APS.
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