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British bank shares gain sharply after battering - Summary


Published :
Tue, 27 Jan 2009 05:36
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London - Shares in leading British banks made a come-back Monday after a nine-day losing streak prompted by fears over the extent of losses and undeclared so-called bad debt. Barclays led the recovery with a 73-per-cent rise in its share price which closed at 88.7 pence on the London Stock Exchange Monday, compared with 51 pence Friday.

Shares in Lloyds Banking Group, Royal Bank of Scotland (RBS) and HSBC all rose Monday, after being dragged down last week by the revelation that Edinburgh-based RBS was expecting record losses for for 2008.

RBS Monday closed up 20 per cent at 14.5 pence per share, while Lloyds Banking Group shares rose by 32 per cent to 65.2 pence. HSBC was up by 5 per cent at 541 pence per share.

The Financial Times Share Index (FTSE) also closed up sharply at 4,209.01 points Monday, an increase of 156.54 points over Friday.

Analysts said the change in mood was prompted partly by the unusual step taken Monday by Barclays management which, in an open letter to the Stock Exchange, assured shareholders that the bank's finances were sound and that it would not require financial assistance from the government.

"Our starting point is that Barclays has 36 billion pounds (50 billion dollars) of committed equity capital and reserves; we are well-funded, and we are profitable," the bank said in a letter signed by Chairman Marcus Agius and Chief Executive John Varley.

Its 2008 results would show that the bank's profits were "well-ahead" of the 5.3 billion pounds forecast by analysts, said the letter.

Barclays was among the banks which declined to participate in a multibillion government stabilization scheme last October. It instead raised more than 7 billion pounds from investors in the Middle East.

The bank said it expected write-downs for 2008 to total 8 billion pounds. It also announced that its 2008 results would be published early, on February 9, instead of later next month.


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