Barclays upbeat on year profit after shares dive

LONDON Fri Jan 16, 2009 10:13pm GMT

1 of 2. A logo of Barclays Bank is seen on the outside of a branch in central London October 31, 2008.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - Barclays said it expects to report pre-tax profit for the year "well ahead" of sell-side analysts' consensus estimates next month after it shares plunged by a quarter on Friday.

In a statement issued after the London stock market closed, the bank said it "knew of no justification" for the sudden fall in its share price.

The stock closed down 25 percent at 98 pence, the lowest since 1993. Barclays shares have crashed 45 percent this week. The bank will announce results for the year ended December 31, 2008 on February 17, it said.

Dealers said there was no single reason for the fall, although some cited the return of short-selling after a temporary ban.

Talk of more writedowns following big losses by Bank of America and Citigroup Inc added to concerns that banks might need to raise more capital.

The Barclays statement said: "The board of Barclays knows no justification for the fall in the share price.

"The board of Barclays expects to report profit before tax for the year, after reflecting all costs, impairment and market valuations, well ahead of the 5,300 million pounds consensus estimate of sell-side analysts.

"Further, Barclays expects to report a year-end equity tier one capital ratio and tier one capital ratio, on a pro forma basis reflecting the conversion of the Mandatorily Convertible Notes, of approximately 6.5 percent and 9.5 percent, respectively."

Short selling also hurt the stocks late in the day after a ban on the short-selling of financial stocks expired, several dealers said.

Royal Bank of Scotland fell 13 percent to 34.7p and Lloyds TSB lost 4.9 percent to end at 98.4p. HSBC was down 2.2 percent at 535.75p.

Sterling pared gains against the dollar as shares in Barclays tumbled, with the pound falling to $1.4780 from around $1.4860. It was 0.8 percent firmer against the dollar compared with late Thursday. The euro also gained against the British currency.

Several traders could not identify a specific reason for the late slide by Barclays or any of the stocks, but cited several rumours including worries about the impact of a UK rescue plan being discussed, executive departures, writedowns and capital.

"The shorting ban has been lifted and I guess the short guys have been sharpening up their tools and looking to see who they'll have a pop at next," said Numis Securities analyst James Hamilton.

CRISIS TALKS

High level talks about the crisis continue and Bank of England Governor Mervyn King met Prime Minister Gordon Brown, Chancellor Alistair Darling and the Financial Services Authority's chairman Adair Turner on Friday.

The Bank of England and Downing Street confirmed a meeting took place, but neither would comment on what was discussed.

Brown met top bank officials and regulators amid widespread media and market speculation that authorities may be about to announce further measures to boost bank lending.

There is uncertainty about the format of a new government plan being worked on to boost bank lending. It could include fresh capital injections into banks or more government guarantees on toxic assets, the Times said.

A plan could come as early as next week, a Treasury source told Reuters, and state-guarantees to get credit moving again could feature high on the agenda.

Barclays could be at a disadvantage as it did not take any funds in the last rescue plan in October, some dealers said. Barclays raised funds privately instead.

(Additional reporting by Peter Griffiths, Myles Neligan, Keith Weir and Sumeet Desai in London and Dan Wilchins in New York; Editing by Greg Mahlich and Andre Grenon)

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