Barclays Plc, the UK bank that turned down government funding last year, declined for a seventh straight day in London trading on speculation that it may be forced to take more writedowns and be nationalised.
Barclays fell as much as 35 per cent, the biggest drop in at least two decades, and was down 20 per cent at 58.3 pence as of 12:30 pm The shares have lost 62 per cent this month, valuing the company at £4.9 billion ($6.5 billion). London-based Lloyds Banking Group Plc fell as much as 26 per cent on Wednesday.
“There is genuine fear from shareholders, who see a real risk of nationalisation,” said Simon Maughan, an analyst at MF Global Securities Ltd who has a “sell” rating on Barclays. “The whole rest of the world, operating in the same business as Barclays, has seen significant losses. There is talk that Barclays will bring its results forward to prove its case. Bring it on.”
Barclays said January 16 its pretax profit will beat the average analyst estimate of £5.3 billion. The London-based bank said it had a net credit writedowns of £2.1 billion for the first nine months of 2008 and opted out of the UK’s £50 billion plan to recapitalise banks. Edinburgh-based Royal Bank of Scotland Group Plc forecast a 2008 loss of £28 billion Jan. 19 as the government said it would increase its stake to 70 per cent.
Barclays is scheduled to post year-end earnings on February 17, spokesman Alistair Smith said. He declined to comment further.
The UK government announced plans January 19 to guarantee toxic assets for a fee and gave the Bank of England power to buy £50 billion of securities in the second effort in three months to underpin confidence in the banking system.