Barclays in shares surge after £8bn writedown

In a desperate attempt to calm nerves in the City, chairman Marcus Agius and chief executive John Varley insisted the bank was in good health and did not need to raise new funds from the ­Government or private investors.

The pair said profits for 2008 — now to be published on 9 February rather than 17 February — will be "well ahead" of the £5.3 billion forecast by analysts. Barclays made £7 billion in 2007.

The letter was published after Barclays shares crashed 48% last week to a record low of 51.2p amid fears the bank was on the verge of a Government bailout to cover spiralling losses.

It seemed to have the desired effect as the market opened, with the stock reversing losses of 72% over the ­previous nine trading days to stand up xx% or 18.3p to 69.5p.

Rival banks also benefited, with Lloyds Banking Group up 8.7p to 58p and Royal Bank of Scotland 1.4p higher at 13.5p.

Varley said the purpose of the letter was to "address the principal causes of concern which we are hearing" in relation to last week's heavy sell-off.

The fresh losses of £8 billion at ­struggling investment bank Barclays Capital were divulged "in the interests of clarity and transparency" while the decision to bring the results forward was to release information "as quickly as possible", he said. The writedown was not as bad as had been feared.

Meanwhile, some analysts welcomed the extra detail given in today's statement.

"Writing in this way ahead of the release of results is unusual, of course, but the turn of events is also unusual," said Varley.

Barclays said that its tier one capital — a key measure of financial strength — was 9.5% at the end of last year, well ahead of the 6% minimum set by the authorities.

That gave Barclays a cushion equiv­alent to some £17 billion worth of ­profits, Varley said, adding that it gave the bank confidence "that our capital resources are sufficient to manage Barclays safely and prudently even in these difficult markets".

Barclays has raised billions from private sources, including the Abu Dhabi royal family and investors in Qatar, rather than turn to the British Government for funds. Rival RBS is 70% owned by the taxpayer while the state has a 43% stake in Lloyds.

Barclays said today it has £36 billion of capital and was again generating "strong" income from Barclays Capital following the acquisition of Lehman Brothers' American operations.

"We are well-funded and we are profitable," the letter said. "Recognising that 2009 is not yet a month old, and that the global economy will remain weak, we can tell you that customer and client activity levels have been high. As a result, we have had a good start to 2009.

"In particular the operating performance of Barclays Capital, benefiting as it is from the now completed integration of the Lehman business, has been extremely strong."