Barclays to avoid grasp of Treasury

By SIMON WATKINS, MAIL ON SUNDAY FINANCIAL DEPUTY EDITOR
Updated:

Barclays is determined to deny the Government a stake in its business if it takes part in the Treasury insurance scheme for toxic assets.

The bank aims to keep any fees it pays the Government low enough to pay with hard cash, avoiding the need to issue shares to the State.

By keeping the Treasury off its shareholder register, the bank will avoid an embarrassing U-turn as well as side-stepping the public scrutiny and scandal that has dogged Royal Bank of Scotland, most recently over tax avoidance.

Determined: Barclays boss John Varley opposes any State ownership

Determined: Barclays boss John Varley opposes any State ownership

The Government has set a deadline of March 31 for applications from banks to join the Asset Protection Scheme, but Barclays is treating that strictly as a deadline for applications and hopes to put off detailed negotiations, including the sum to be insured and the fee to be paid, until after that date.

Analysts believe Barclays will insure a maximum of £80billion of loans, but could keep its involvement as low as £30billion.

If Barclays, like Lloyds, pays six per cent to use the insurance scheme, it could keep its final bill well below £5billion.

Joining the insurance scheme will release capital set aside for write-downs, avoiding the need to issue new shares or sell off divisions.

'We are talking about the sort of sums a bank like Barclays ought to be able to lay its hands on very easily, even in these hard times,' said one source close to the bank.

Barclays could put off finalising a deal until after its annual meeting on April 23, though delaying that long could infuriate shareholders keen to discuss the details.

Barclays chief executive John Varley has set his face so firmly against Government involvement in Barclays that many believe a U-turn would now cost him his job.

Lloyds Banking Group, which could end up 77 per cent State-owned after its insurance deal last week, has given a new director £450,000 in shares for just joining the group. But Mark Fisher, who joins from RBS, will not be able to cash the shares for three years.


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