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Barclays plunges amid new worries over bailouts bill
Bill Condie23 Jan 2009
Barclays' shares tumbled sharply again today as investors ignored chief executive John Varley's attempts to calm the markets.
The bank's stock fell for the ninth day running, losing nearly 18%, or 10.4p, at 48.8p.
The fall came despite an interview last night with Varley in which he declared his confidence that Monday's government bailout plan would work.
However, he said there was nothing he could do to stop the rot in Barclays' shares, which have lost more than two thirds since 12 January amid fears that it would need to tap the government for more cash or possibly even be nationalised.
Meanwhile, the Government came under increased pressure over its multi-billion pound schemes to bail out the banking system, as it emerged today that Britain could let the banks off more lightly than the White House did Wall Street firms.
Plans said to be under consideration at the Treasury would leave the UK taxpayer to underwrite many hundreds of billions of pounds of potential losses - more than previously thought.
Chancellor Alistair Darling plans to use taxpayers' money as insurance against losses from banks' so-called "toxic assets". It is aimed at reassuring potential investors that it is safe to do business with British banks again.
The scheme is based on a similar plan in the US. However, it emerged today that, while the White House has demanded that banks shoulder the first 8% of their losses, the British Government, is considering setting the threshold at just 2%. That smaller "excess" in the insurance policy could end up costing taxpayers billions of pounds.
It is difficult to quantify the additional burden a 2% "first loss" scheme could expose the taxpayer to, but a Merrill Lynch report suggests that if the Government insured £115 billion with a first loss of 10%, it would cost £27 billion. The lower the "first loss" threshold, the larger the cost to the Government is likely to be.
MPs on the Labour-dominated Treasury Select Committee today urged Darling to state the cost of his bailouts.
A Treasury spokesman said: "The government has not yet set a fee for this scheme and will do so when it has discussed with the banks the value of the assets and the risks they present."
Reader views (8)
The government may be that much in debt they may not be in a position to bail out the Banks.
- Stan White, leeds, 25/01/2009 22:20
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Let the banks go broke. We can then see the "assets". The final bill can then be estimated and we can get on with it. Use Northern Rock as a govt bank until responsible banking can be achieved. Poor Brits.
- John, Australia, 25/01/2009 03:32
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Brown isn't fit to run a charity shop let alone the country, he got us into this mess in the first instance, Darling is the one trying to unsucessfully trying to get us out of it. Bah Humbug to both of them.
- Anne,, Devon, 24/01/2009 22:19
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Brown and Darling should both be removed from office and detained in a secure unit.
- R.F., Yorks, UK, 24/01/2009 09:16
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Barclays showed a level of ignorance and arrogance when they declined the earlier offer of public money. The Manchester City owner lost £400 million as part of that refinancing, and has probably lost the same again over the last week.
These are the financial specialists and economist that the earlier contributor seems to think are the experts.
We are all concerned at what is going on in the banking world as it appears to be collapsing around us. We have two alternatives, try to save the banking system from collapse or Do Nothing.
- Andrew W1, London, 24/01/2009 00:22
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How much longer can Alister Derling remain in the Chancellor position??
- Jacqueline, Hampstead, London, 23/01/2009 19:08
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Most British people know that the state of the economy is delicate and that banks are in a large hole. We do not need John McFail and his Labour colleagues on the Treasury Select committee to tell us. Their bleating undermines the attempts by their own party in government to create a foundation for the banks and the economy.
- Doug Watt, london, 23/01/2009 12:32
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The only people who are not concerned is Crash Gordon and sidekicks. They know much better they claim than EVERYONE ELSE, especially better they know than financial specialists and economists. Crash is best!
- Georgie, Islington, London, 23/01/2009 11:20
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