Barclays Plc fell as much as 9.1 percent in London trading as investors said they are concerned about the extent of credit-market losses at the third-biggest U.K. bank.
The shares dropped 11.75 pence, or 2.4 percent, to 474.5 pence after sliding to as low as 44.25 pence. Credit-default swaps, used to protect debt from default or speculate on credit quality, rose 10.5 basis points to 68.5 basis points, according to Deutsche Bank AG. Credit-default swaps rise as perceptions of creditworthiness worsen.
Investors, who have seen the value of their shares fall 29 percent in the past month, question why Barclays hasn't made an announcement since investment banks such as Citigroup Inc., Morgan Stanley and UBS AG revealed more than $40 billion of losses from the swings of the past three months. Barclays, which said Oct. 12 that profit growth at its securities, asset- management and private banking units has been ``strong'' this year, isn't planning an update until Nov. 27.
``We all seem to be in the dark here,'' said Colin Morton, a fund manager at Leeds-based Rensburg Sheppards, which oversees about 13 billion pounds and held about 26 million Barclays shares at the beginning of September. ``There is one word the market hates and that word is uncertainty.''
Barclays shares were temporarily placed into a so-called volatility auction today after speculation of a writedown of as much as 10 billion pounds ($21 billion) on its assets prompted the drop. Such an interruption in trading is triggered by sudden swings in the shares and is aimed at stabilizing the price by matching bids and offers in an orderly fashion.
``There is absolutely no substance in these rumors,'' spokesman Alistair Smith said. He also said Chief Executive Officer John Varley does not plan to step down.
Growth at Barclays Capital, which generates more than a third of the bank's pretax profit, has been driven by gains in structured credit, derivatives and leveraged loans.
Morgan Stanley, the second-biggest U.S. securities firm, said this week it lost $3.7 billion in the two months through Oct. 31 after late payments on U.S. home-loans rose to a five- year high and foreclosures set a record. Wachovia Corp., the fourth-largest U.S. bank, set aside as much as $600 million for loan losses in the fourth quarter and said today that the value of some securities fell by $1.1 billion before tax in October.
Barclays and Royal Bank of Scotland Group Plc may write down 2.1 billion pounds in the second half due to the collapse of credit-related securities, Sanford C. Bernstein & Co. analysts wrote in a report Nov. 7. Writedowns may total 1.6 billion pounds at Barclays and 500 million pounds at Royal Bank in a ``realistic'' scenario, they wrote.
``There is some talk doing the rounds that Barclays have suffered big losses in the credit market crisis,'' said Martin Slaney, head of spread betting at GFT Global Markets in London. ``If that were true we could expect at least 15 percent of Barclays' value to be wiped off.''
Barclays stock dropped 6 percent on Nov. 2 after speculation that the lender approached the Bank of England for emergency funding. The central bank later said in its daily report on money-market operations that it had made no loans at its penalty rate.
Barclays said in a statement today it bought back 4 million of its own shares at 466.4 pence each. The bank has bought back 30.5 million of its own shares this month.
Royal Bank shares, which are down 26 percent in the past month, fell 3 percent to 402.75 pence in London. Edinburgh-based Royal Bank led a group that beat Barclays last month in the 72 billion-euro ($106 billion) contest to take over ABN Amro Holding NV, the biggest Dutch bank.
Barclays Capital, the securities unit run by Robert Diamond, shifted responsibility for credit trading from Co- President Grant Kvalheim to Jerry del Missier in September.
Kvalheim, 51, is overseeing investment banking, loan origination and loan syndication, a Barclays Capital spokesman said today. Del Missier, 45, added trading of credit-related securities, including collateralized debt obligations, to commodities and equities.
``Everyone wants them to bring forward their trading statement,'' said Martin Kinsler, a London-based fund manager who helps manage about $125 billion at Henderson Group Plc, including about 35 million Barclays shares. ``The rumor is rubbish. It is a solid bank.'' ( Bloomberg )