Barclays shares soar as FSA gives it the all clear
27 March 2009 / by Rachael Stiles
The FSA’s stress-test of Barclays’ balance sheet has determined that there are no serious issues in its finances and the bank is strong enough to weather the recession, the BBC has reported, which will allow the bank to avoid taking part in the Government’s Asset Protection Scheme.
The FSA’s clean bill of health for Barclays’ balance sheet means that the bank might rely on other sources of capital instead of using taxpayers’ money to insure its toxic assets.
Barclays shares rose 8.35 per cent to stand at 151.80p this morning on the back of the FSA’s assessment, also buoyed by Barclays’ confirmation last week that it is in talks with potential buyers for its fund management business, iShares, which will reportedly raise up to £3.5billion of capital.
Some analysts are of the opinion that the capital injected by the bank’s Middle Eastern investors last year, combined with a potential cash call to shareholders later this year will give it sufficient capital to tide it over for several years while it absorbs the impact of its toxic loans.
Or, if Barclays does decide to go ahead with the Asset Protection Scheme, the FSA’s positive assessment will give it more bargaining power with the Treasury when it comes to negotiating the terms of the agreement and how much it will have to pay for the privilege.
Along with other banks which have not yet participated in the scheme, Barclays only has until the end of the month to approach the Treasury and show its interest.
Barclays has been trying to avoid accepting taxpayers’ money, because its chief executive, John Varley, has been vehemently opposed to relinquishing a stake in the bank to the Government.
Jane Croft wrote in the Financial Times today that “Over the coming few days, the market will learn weather the forces of Treasury cajoling and intensive FSA scrutiny prove too much for him.”
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