Press comment following interim management statement

FT: Peter Thal Larsen, Banking Editor
http://www.ft.com/cms/s/0/9c5160f6-22e1-11dd-93a9-000077b07658.html

Barclays' core Tier 1 ratio at the end of March was 5.1 per cent and the bank indicated that this was likely to fall further by the end of June.
Chris Lucas, finance director, refused to be drawn on how the bank would rebuild its capital but added: "We would agree that regulators will be over time looking for higher capital ratios and looking for less leverage in institutions. That will be an industry-wide phenomenon and we will have to be part of that."

The Herald: Tim Sharp
http://www.theherald.co.uk/business/news/display.var.2275510.0.Barclays_keeps_quiet_on_rights_issue.php

The bank expects its core tier one capital ratio - a key measure of its financial cushion - to be slightly lower at the end of June than the 5.1% it reported at the end of 2007.
Finance director Chris Lucas maintained that the company was still targeting a ratio of some 5.25%, but said the company was prepared to run above or below this level, "depending on circumstances".
This is at variance with many of its competitors. HBOS and Royal Bank of Scotland have already announced capital raising to bring their core capital ratios above 6%.
Analysts at Lehman Brothers calculate that achieving a 6% tier one ratio would require the bank to issue shares worth £5bn, plus more for additional writedowns.

The Scotsman: Martin Flanagan
http://thescotsman.scotsman.com/business/Barclays-leaves-question-mark-over.4090737.jp

Lucas told analysts yesterday that he remained comfortable with an average forecast for 2008 profits of £6.4bn – which would be down 10 per cent from 2007 in slowing financial markets.

The bank said it expected its core Tier 1 capital ratio, a measure of its financial strength underpinning loans, to be slightly lower at the end of June than the 5.1 per cent it reported at the end of 2007. It intends to lift this to 5.25 per cent "in time".

Lucas said the bank did not intend to follow the lead of several rivals by paying its dividend in shares to save cash. "Our view on scrip dividends is they are not really a dividend, and therefore are not attractive to us," he said.

Times: Christine Seib
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3941556.ece

John Varley, chief executive, called scrip dividends an oxymoron and ruled out paying Barclays shareholders in stock.
“A scrip dividend isn’t really a dividend. We’re clear about what our shareholders like. They like dividends and dividends mean cash,” he said.

RBS, HBOS and B&B opted for rights issues to take their core equity Tier 1 ratios above 6 per cent, which they said was essential in volatile markets. But Mr Varley was scornful of such targets and said that a few months of stable stock markets would raise questions about their rush to issue equity.
“Six per cent isn’t an eternal truth,” he said. “You should be appropriately begrudging in your capital issuance. If there were three months of stability in the market, I think there would be a lot more questions about share issuance so far.”
However, he did not rule out some form of capital raising: “We’re not taking any of these options off the table.”

Chris Lucas, the bank’s finance director, said that financial regulators expected capital ratios to increase over time but that the Financial Services Authority was “aware of our plans and intentions”.

The bank’s £1.7 billion writedown, on top of a £1.6 billion loss last year, was offset by an accounting gain of £700 million from the deterioration in the value of its own debt. However, about £500 million of this gain was wiped out in April.

Telegraph: Philip Aldrick
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/16/cnbarclays116.xml

John Varley said: "I accept this is a good time to have a ratio at, or better, than your target. Do we need to raise capital? We don't. But we shouldn't take any options off the table."

Mr Varley insisted the bank was in the enviable position of being able to choose to strengthen its position by generating profits and reining in loan growth.

He also claimed to be at ease with looming economic risks including an anticipated 5pc-10pc fall in UK house prices over the next two years. "Is Barclays behaving like a constrained bank? You don't see us hunkering down. We are managing to compete strongly in these markets."

Mr Varley rejected suggestions that Barclays should follow rivals Royal Bank of Scotland and HBOS by setting a more conservative capital ratio target. "It's not clear to me that there is something magic about a 6pc capital ratio. You don't want to be in a position where you have too much capital."

In another veiled swipe at RBS and HBOS, finance director Chris Lucas ruled out paying the dividend in shares. "Our view on scrip dividends is they are not really a dividend, and therefore are not attractive to us," he said.

Analysts questioned if Barclays had taken sufficient writedowns on its £8.2bn exposure to US sub-prime, which have been marked down just 30pc compared with 60pc at RBS. Mr Varley said: "Risk management at the different banks is not generic so you would not expect the marks to be generic."

The bank also said its UK mortgage market share had jumped to 20pc, from 6pc, in the first quarter as rivals pulled back.

Independent: Sean Farrell, Financial Editor
http://www.independent.co.uk/news/business/news/pressure-mounts-on-barclays-to-strengthen-its-capital-position-829389.html

Moody's cut Barclays' financial strength ratingto B from B+ with a negative outlook.

Telegraph: Philip Aldrick
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/19/cndir119.xml

Mr Seegers has suffered the biggest personal loss after buying £1.95m of Barclays stock last year at 613p. The stake is now worth £1.33m. Mr Diamond is nursing losses of £357,000.
Barclays chief executive John Varley and chairman Marcus Agius have lost £185,000 on their stock purchases.