Barclays looking to bolster confidence

UK banking giant Barclays was hoping today that an attempt to shore up investor confidence had worked after the value of its shares plummeted during a frantic hour of trading on the FTSE yesterday..

The bank's shares were down more than 24% at one point yesterday, but its board said in a statement last night that it knew “no justification for the fall”.

The statement said next month the bank expected to report that profits before tax for 2008 were “well ahead” of the £5.3bn (€5.87bn) forecast by analysts.

Earlier this week, Barclays announced it planned to cut more than 4,000 jobs across its retail and commercial and investment banking businesses.

Royal Bank of Scotland – which is almost 60% owned by the UK taxpayer – was also hit by diving shares yesterday, with declines of more than 16%.

The turbulence in the sector followed speculation that more financial institutions would look for UK government cash.

The falls came on a day that US financial giant Citigroup announced it had suffered a quarterly loss of $8.29bn (€6.23bn), following news that Bank of America was granted $20bn (€15bn) in State aid.

At home, Anglo Irish Bank is to be nationalised by the Government after a dramatic announcement on Thursday night, while the UK is reportedly thrashing out proposals for another round of bank rescue measures.

The tumbling share prices also came on the day that the ban on short-selling - imposed by the British Financial Services Authority last September – expired.

Confidence in the financial sector has collapsed recently, with fears ahead of the forthcoming results season.