Barclays share prices have recovered by almost 40 per cent following an open letter sent by its chairman Marcus Agius and chief executive John Varley, written to reassure investors that its situation is not as dire as it might seem.
After share prices have fallen sharply in the last week, amid speculation that the Government was to take a stake in the bank, shareholders will welcome the news that Barclays' profits for 2008 were "well ahead" of market targets, causing shares to jump back up by almost 40 per cent.
Annual profits exceeded £5.3billion, the letter states, despite an £8billion gross writedown at its investment
bank, which was absorbed by record income levels, they said.
"In view of the events in the banking sector last week, we have decided to communicate now with employees, customers, clients, and shareholders" in order to address the concerns being raised, the joint letter explained.
The bank is "well funded" and profitable, it said, with £36billion of committed equity capital and reserves.
There has been much speculation recently that Barclays
would have to seek help from the Government's bail-out scheme, aimed at stabilising banks struggling under the weight of the credit crisis.
But after securing £7billion from private investors last autumn, which it said has "substantially strengthened" its capital base, Aguis and Varley said that Barclays is seeking "no further capital subscription".
They continued to say 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."
They also assured investors that while the global economy remains weak, Barclays has been enjoying high levels of customer and client activity in the first few weeks of 2009, marking a "good start" to the year.
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