Barclays writes down £1bn and considers rights issue

by Gill Montia

Story link: Barclays writes down £1bn and considers rights issue

In a trading update, Barclays has revealed that it has written down a further £1 billion in relation to the credit crisis, in the first quarter of the year.

The bank’s investment division, Barclays Capital, absorbed a £1.006 billion write down as credit market conditions worsened. However, the unit remained profitable overall.

Profit for the first quarter declined year-on-year, largely as a result of tougher market conditions in March but the group’s UK retail business recorded strong profit growth.

Both its commercial banking and mortgage business also performed well during the first three months of the year.

Barclays says it expects that by the end of June, its key Tier One capital ratio will be slightly below its 5.1% level of last December.

Banks are currently under pressure from regulators to raise their capital to risk ratios and Barclays could follow Royal Bank of Scotland, HBOS and Bradford & Bingley in a rights issue.

According to the group’s chief executive, John Varley, a number of options are available to improve the bank’s capital position and at this stage, none are being ruled out.