Shares of UK bank Barclays jumped in early trading Thursday after the lender said it would have to write down £1.3 billion ($2.7 billion) from subprime lending and the related credit crunch, a far lower provision that rumors in the markets had suggested.
Shares of Barclays rose as much as 5.6% in early trading, and the stock is up some 24% from lows seen just last week when a host of rumors popped up, including emergency Bank of England funding, the resignation of CEO John Varley, an emergency share issuance and a $10 billion write-down.
All those rumors have been proven false.
In an interim statement issued in London, the bank reported a write-down of £800 million last month alone. However, the liability is far less than had been speculated in the market, with mounting rumors suggesting the group’s investment arm was nursing a £10 billion black hole in its finances. The group, which brought forward its trading statement from November 27, said: “Today’s extensive disclosure demonstrates the strength and resilience of our performance during the year and in particular during the turbulent month of October.” There had been speculation that Barclays, Britain’s third-biggest bank, would be especially vulnerable to the current credit crisis, after the bank pulled out of a major takeover bid for Dutch ABN Amro banking giant last month. (marketwatch, m&c.com)