Marcus Agius, the chairman of Barclays, and its chief executive John Varley have written an open letter to reassure investors, staff and customers of the bank’s continuing good health. The letter says 2008 profit will be “well ahead” of market expectations.
It also says that its annual profit will be higher than £5.3bn despite £8bn of gross write-downs at its investment bank. The decision to publish the open letter comes in response to the bank’s falling share price in recent months because of concerns over the financial services sector.
“In view of the events in the banking sector last week, we have decided to communicate now with employees, customers, clients and shareholders,” the pair write. “These figures demonstrate that, although we have been heavily impacted by the credit crunch, our income generation was at a record level in 2008 and has enabled us to withstand this impact and still produce strong profits.”
They add that Barclays is “well funded” and “profitable” and that it will not seek any financial support from the government. In November last year, Barclays secured £7bn of private funds, mainly from Middle Eastern investors.
Last week, the government unveiled a second bank rescue package in order to kickstart the economy. Measures included increasing the its stake in rival Royal Bank of Scotland Group to nearly 70% from 58% as the Edinburgh-based bank announced record losses of £8bn for 2008.