Panic sell off suspends Barclays shares

Friday, 09 November 2007 12:00

Trading in Barclays shares was suspended temporarily today after rumours over the bank's losses from the sub-prime crisis.

Shares fell nine per cent over the belief - denied by Barclays - it would announce losses of as much as £4.8 billion.

It was suggested Barclays would have to launch an emergency rights issue to raise funds and the firm's chief executive and investment banking head would become the latest boardroom casualties of the credit crunch.

Barclays' share price is now down almost 40 per cent from the high last year.

In response to the unease over Barclays, sterling also fell from the 26-year record highs against the dollar. The pound's fall was helped by official figures showing Britain's goods trade deficit grew to a record level in September.

Last month at an extraordinary general meeting, Barclays reaffirmed the position of its investment banking arm Barclays Capital.

It stated: "Barclays Capital traded profitably in each of July and August and set out an expectation that it will continue to do so for the rest of 2007. Barclays also stated that Barclays Wealth and Barclays Global Investors were performing in line with expectations."

Yesterday both Royal Bank of Scotland and Barclays saw share prices fall over fears about their exposure to sub-prime losses.

Both banks were rocked by a research note from market analysts Sanford Bernstein stating they would record falls in profits.

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