Friday, November 16, 2007

A Mere £1.3BN

Barclays sought to calm the markets yesterday by stating that its investment banking business could maintain its growth in spite of a write down of £1.3BN as a result of the credit crunch.

John Varley, the CEO, said that Barclays Capital and Barclays could weather storms in parts of their operations.

The bank wrote down £500m of credit, mortgage and leveraged finance assets for the third quarter of the year and an extra £800m for October.

Mr Varley said:

"We do feel confident about that [Barclays Capital's growth]. It is not unusual in an investment banking business to have some areas that are hot and some that are cold. The sub-prime area, which has not historically been a big area for us, is cold at the moment. We have other areas that are hot."

He added:

"Is the business model working well? Is the risk management working well? Is there diversification by geography and asset class? The answer is in the numbers."

Last week there had been rumours of a massive £4.9BN writedown and the resignations of Mr Varley and Bob Diamond, the head of investment banking.

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