SHARES in Barclays soared after the banking giant confirmed it was unlikely to need to raise more money to strengthen its finances.
The company said it had been given the all-clear after its balance sheet was subjected to a detailed “stress test” by City watchdog the Financial Services Authority.
Shares in Barclays soared by 33% to close at 173p yesterday as investors welcomed the reassuring news. There were small gains for HSBC and Lloyds Banking Group.
The bank said: “Barclays confirms, following this work and discussion with the FSA, that its capital position and resources are expected to continue to meet the capital requirements which the FSA published on 19 January.”
Barclays, which is close to selling its iShares asset management business for about £4.5bn to strengthen its finances further, has so far avoided the need for taxpayer support.
Last year, it raised about £7bn, mostly from Middle Eastern investors, to bolster its capital position.
Barclays has until next Tuesday to decide whether to take part in the Government’s taxpayer-backed insurance scheme to protect itself against losses on “toxic” assets.
The FSA and the Treasury want to make sure that if Barclays decides not to join the Asset Protection Scheme, it will not be forced to do so a few months later following another bout of market turmoil.
Barclays is keen to avoid the scheme due to its restrictions on pay and bonuses.
Royal Bank of Scotland and Lloyds Banking Group are majority-owned by the taxpayer after insuring risky investments worth hundreds of billions in the scheme.
But in February, Barclays posted better than expected profits of £6.1bn for 2008 – although the figure is 14% below the previous year .
Barclays said last week it had enjoyed “a strong start” to 2009.
