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Robert,

You write: "since on paper Barcap is stuffed to the gills with CDOs, and monoline exposure and leveraged loans".

The assertion that you make may be quite correct but there are several scenarios that may not cause Barcap's exposure to appear in the accounts.

First: it may by either luck or judgment avoided some of the worst instruments,

Second: its view of the need to write these down may be clouded by optimism, misplaced or otherwise,

Third: its accounting systems do not permit it to form a detailed snapshot of its exposure.

Fourth: its 'milch cow' of Barclaycard permits it to better manage its losses.

I could go on but the problem from the outside is always to see what is actually going on in such large organizations.

If we assume to figures are correct and prudent and real and contingent losses have been fully accounted for than all one can do is marvel at such success.

On the other hand would such an organization be in the continual process of cutting 10 per cent of its contractors rates again and again? Surely it would be looking to expand and build on its success rather than continue to cut-back?

Barclays have always had a solid domestic operation like Lloyds, Nat West etc.

Their risk lies in their very significant Investment banking arm.

Unlike the smaller banks who were hit by the closure of the Moneymarket, Barclays Investment bank was/is in the thick of the Structured Investment Vehicle/CDO market.

Now accepting their figures, would suggest the risks to less involved Banks are considerably lower than they have allowed for.

It is just a question of who you believe.

Of course losses are set off against tax, and if one wishes to sell out cheap to an overseas Hedge Fund then what better way to reduce the Share Price for them than to manufacture a loss.

What a complicated world this might be!

Anyone want to buy Pounds for Pence, the Banks are the place to shop !

the one 'wow' result for me was Barclaycard profit rising by 30% period on period.

talk about bucking the trend

It appears that "losing out" on ABN Amro may have been a huge blessing in disguise.

Lots of cash to lend to UK mortgage holders who have low LTV's.

Why is nobody asking the BIG question?

Barclays Tier 1 capital ratio is now at 5%!!!!

That means it has has has to have a rights issue in order to increase this ratio.

It has 26% of a market that is predicted to lose another 25/30% in value.

Someone mentioned its card business will support its business! What ?

This isnt rocket science, its math

Hmmm...do I detect a note of disbelief in your report, Robert?

Are we looking at a bank that has been able to avoid the worst of the downturn to date? if so, then compliments are due to the management.

Or, are we possibly looking at a controlled exposure over time of a sequence of write-downs? This would be a silly thing for a public company to do and suicidal for any bank management under the prevailing circumstances as it will all come out in any subsequent audit.

I suggest that any cynicism is disregarded and that the situation is taken at face value. The results are good under current conditions and we need to be a bit more cheerful.

I suppose now Alliance and Leicester and paragon have been gobbled up cheap, there's only one left to be absorbed by a bigger rival, poor old Bradford and Bingley!

Which bank will go bargain hunting then ?

As an ex-employee and shareholder I have been concerned about what "toxic" debt there might be in BarCap. I still have my doubts but short of an armageddon scenario it looks as though Barclays will ride out the storm. Of ciourse there will be increasing provisions required from the "real" economy but even the Americanised Barclays knows how to deal with those.

What i though interestiong was the consolidated interim income statement which shows that that staff costs are £699m lower than they were in the same period in 2007, a 15% reduction. That is impressive even if there is a £450m increase in the general admin expenses which I presume is an increase in contract staff. It looks to me as though Barclays have got their core business and cost structure right.

As has been said elsewhere, thank God they did not get ABN Amro (at least short term).

"And lest you think it is taking foolish risks with house prices falling, the average value of these new mortgages is 51% of the value of the respective properties - so it'll make good money on all scenarios for our economy other than Armageddon."

This is not quite true, is it?

If every new mortgage was at 51% Loan to Value the statement might be true, but this is surely not the case. How much "good money" will be made depends on the spread of LTVs within this portfolio. It's just not right to take the average, because the "spare" cover from the loans with low LTVs cannot be used to assist in the case of problems with high LTV loans.

The only way to judge the health of Barclays' new lending against various scenarios of property price decline is to take into account the spread by accounting for each loan discretely. The amount of risk is the sum of the individual exposures, not a genaralisation from the total.

Oh and by the way

Are Barclays contracting better bailiffs than the rest of the Banks? Their % writedowns as against the rest of the sector (who all have the same tangled up CDO's that nobody can understand) is very different.

Is this a case of this paper is will be written off over time to make the numbers look more impressive? The banks T1 ratio would look a mess so soon after the last rights issue if it had have been using the same method of accounting, wouldnt it?

V. strange, time will tell

PetersKitchen (#5) - sorry but you are wrong.

Tier 1 Capital Ratio is 7.9% - it is the equity Tier 1 ratio that is 5%.

BUT - if you read the small print - this does not include the recent equity issue which takes the ratios up to 9.1% and 6.3% respectively - as the issue was after H1 (30th June).

These new ratios should be more than adequate and are in line with most competitors.

If Barclays are in this position, then all well and good. If they have increased their share of the mortgage market through prudent lending, then again all well and good. Just hope it's all true. But as you say, Robert, it is pretty remarkable given your view that they are exposed to some of the more questionable financial 'products' out there. However, if true, it's good to see a bank doing OK for a change.

Not bad from Barclays on the face of it.

But it does need to be clarified that all banks are marking their assets to market in the same way.

Otherwise, we could find that in a few quarters, Barclays are still marking down but RBS could even be marking up.

I suspect that banks are so mired in complex assets that they can hardly value them properly at all, never mind do it in a consistent fashion.

If that's the case, it's shameful.

A lot more clarity is needed still.

Liar Liar pants on fire.

The reason is they are not declaring all the losses.

Barclays is the 3rd biggest investor in this mess after Citi group and Merill

Name Losses so far
Citi $55 billion
Merill $51 billion
Barclays $4 billion (£2 billion)

No way hose. They are not telling the truth.

#11

" The proceeds lifted its so- called equity Tier 1 capital ratio, which measure a bank's ability to absorb losses, to about 6.3 percent.

That ratio will drop to about 5.8 percent as the bank spends money to expand in the U.S. and Asia, Chief Executive Officer John Varley, 52, told reporters today. "

BTW, when he says expand in US, are they going to increase their mortgage book there as well?

In all probability, I;ll bet on a new rounfd of funding in Q1 2009

any other offers?

What part of PROFITS in the BILLIONS is disappointing!?

The only thing the CE will be disappointed in will be any reduction is his undoubtedly huge bonus...

There has always been an arrogance at Barclays that it does things its way and it's fair to assume that it has chosen to keep the market price or book value of its toxic holdings at a level far higher than its contemporaries.

Until the treasury and Bank of England make clear how these 'assets' are to be priced given ther eis no market for them, we shoudl take the performance as smart window dressing and pure fantasy. But teh conundrum is how can the Treasury dictate terms on book keeping when its own are in such a mess. There is little point in asking teh FSA for guidance as their [articipation in banking supervision has been elimanated courtesy of their incompetant handling of Northern Rock as well as a litany of other areas, Payment Protection, Endowments, Investment Trusts to have a few not forgotten disasters.

We can only admire Goldman Sachs for masterfully clearing the decks before the wind changed but as #14 wrote Barcap has been in the thick of it since day one, and to deliver the nominal level of write offs under the auspices that what they - Barcap - have on their books is the good stuff is laughable.

Barclays is calling the regulatory authorities bluff, because they know they are too weak to do anything. Sorry John and Bob, nice try but these figures are pulling the wool over ones eyes.

These results are very suprising given the aggressive growth of the investment bank but it remains to be see what happens next time. How do you know who is taking the hit or who is trying to hide things in the hope things might improve?

I do not buy myself that all will be well here. They dodged a bullet in not buying ABN, but now I think there may well be a

Longer term ABN will probably pay off, but thats long term not short term.

A lot of the market problems are down to the shortermism of many of the new trading schemes, such as spreadbetting (not subject to capital gains tax - now theres a dodge!).

And of course Stock lending, thats damaged the Pension Funds !

Hooray for Barclays.
But wait a minute...is there anyone in the country who TRUSTS what a bank says?
Is there anyone who believes that "creative accounting" is honest?
Most bank-weary folk will take it all with a large pinch of salt.

Not sure I believe these results either. read an article recently that described how under accounting rules you only have to mark an asset to market if it is to be traded. If they are held to maturity they don't need to be reassessed in the accounts/

As markets are closed for the CDO's maybe barcap has decided to hold the assets to maturity to see how much they can get back (and not write them down and screw the figures) ?? !

Barclays reminds me of Marconi!