Barclays shares rise after open letter from bank bosses

Barclays shares rose more than 25% today after an open letter from the bank’s under-pressure bosses helped settle investor nerves.

Chairman Marcus Agius and chief executive John Varley wrote the letter to “address the principal causes of concern which we are hearing”.

Barclays shares have tumbled for the past fortnight and the bank lost almost half of its value last week amid fears that it will have to turn to the UK Government for funding help.

But Mr Agius and Mr Varley said Barclays would not need to ask the Government for any financial assistance.

Barclays shunned a taxpayer bail-out last year, but has raised more than £7bn (€7.4bn) billion through a fundraising which leaves almost a third of the bank in the hands of Middle East investors.

The letter, released through the stock market this morning, said the capital raising gave Barclays more than the required funds to provide a buffer against future losses.

Barclays had “confidence that our capital resources are sufficient to manage Barclays safely and prudently even in these difficult markets”, it added.

“Our starting point is that Barclays has £36bn (€38.1bn) of committed equity capital and reserves; we are well-funded, and we are profitable.

“However, we know that our stakeholders want to see the detailed figures for 2008 as quickly as possible.”

The bank will now release its financial results early, on February 9, and the letter said profits would be “well ahead” of the £5.3bn (€5.6bn) forecast in the City.

Mr Agius and Mr Varley said the bank would announce write-downs amounting to £8bn (€8.4bn) from the credit market exposures of Barclays Capital in its upcoming financial report.

“These figures demonstrate that although we have been heavily impacted by the credit crunch, our income generation was at a record level in 2008 and has enabled us to withstand this impact and still produce strong profits,” the letter said.

It added that, in the interest of clarity, the bank would provide “extensive details” of the write-downs.

The letter welcomed the Government’s most recent banking bail-out package, particularly the planned insurance scheme which would provide guarantees for bank lending.

Mr Agius and Mr Varley said Barclays had had a “good start to 2009”, although they predicted that the global economy would remain weak.

The letter said Barclays Capital had benefited from the integration of Lehman Brothers and had an “extremely strong” performance in the first month of the year.

The assurance comes just two weeks after Barclays said it planned to cut around 2,100 jobs in its global investment banking, Barclays Capital, and Barclays Global Investors businesses.

Barclays also plans to cut a similar number of workers from its retail and commercial banking division.