Thursday, May 15, 2008
Never say never
The UK banking system is scambling for capital. Today, Barclays bank signaled to the market that it may have to raise more money to cover its growing pile of losses. Chris Lucas, Barclays finance director, said: "We’re not going to rule in or rule out any option at this stage."
Barclays better move quickly. Markets tend to be fickle, and will soon become bored, as one failing bank after another looks for more money through issuing new shares.
Barclays do need the cash; they have just written down £1.7 billon due to sub prime and other bad investments. Furthermore, their tier 1 capital adequacy ratio has fallen to just 5.1 per cent. If the ratio falls further, the Bank might find itself receiving unwelcome attention from the regulator.