Shares in Barclays Bank in the UK have sky rocketed over the weekend. The shares have risen 40%, snapping a nine session losing streak as the under-pressure bank said it sees significant pre-tax profits in the year of 2008 and is not seeking any further capital rising. In a very recent open letter to shareholders and customers alike, published on Monday the 26th January, Barclays repeated its forecast, issued on January 16th that it expected to report a full year profit before tax “well ahead” of the market’s consensus estimate of 5.3 billion pounds in total. Barclays bank had to completely refine their own logistics by commissioning a new asset management software package to keep track of the entire rise in stock. Such asset tracking could cost the consumer millions of pounds so it is important to keep track of all the shares and stocks.
If Barclays is able to avoid capital raising until after the very end of June it would unwind much of the damage done in the past week, as it would avoid triggering the anti-dilution clauses in the Middle East contracts. Middle East investors have recently pumped seven billion pounds into Barclays in October, and a clause in that deal said that if that bank raised any more capital before the beginning of June then they would receive a greater number of shares for their original investment.
Before the bounce Barclarys’ shares had lost more than two thirds of their value over the last 2 weeks on concerns that the bank will be forced to raise their own fresh capital as write downs mount in tandem with the ever slowing global economy.
It is a very confusing time for everyone at the moment. There is not telling which banks are trust worthy or even stable considering the current economic crisis. Who knows what could unfold as the weeks go by.
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