Barclays will make profit for 2008, insists Varley

John Varley, Barclays' chief executive, last night insisted that the bank would make a profit for 2008 after taking all necessary writedowns on toxic credit assets.

Mr Varley also said that Barclays intended to pay in cash if it participated in the Government's plan to insure banks' assets against further losses and the Government was not seeking to take ordinary shares as payment.

"The risk diversification, the management of costs and the diversification of income generation in Barclays... has enabled us to support the risks that we take, had enabled us to absorb the writedowns that we have taken during the course of the year as indices have fallen, and still produce solid profits," Mr Varley said.

His comments were Barclays' latest attempt to shore up its share price, which has tumbled for eight straight days, losing 68 per cent. They fell 10 per cent yesterday to 59.2p. After the shares lost a quarter of their value last Friday, the bank said its annual profit would be "well ahead" of analysts' £5.3bn expectations, but the falls continued.

Mr Varley said Barclays was waiting to see the terms of the Government's proposals, but that "the Government was very clear it's not looking for ordinary equity as a means of satisfying that payment... our predisposition would be to pay cash".

Investors are concerned that Barclays faces big losses from writeowns on toxic debt assets after Royal Bank of Scotland announced big losses from similar activities on Monday. Mr Varley said the Financial Services Authority had been in close contact and was comfortable with the bank's disclosures about its balance sheet. "If we were not honouring that obligation, believe me we would not be allowed to do business, simple as that," he said.

Its shares fell again yesterday partly on fears that its agreement with Middle East investors may prevent the Government providing capital. Cazenove said the bank was not prevented from selling a stake to the Government, and a capital raising might not leave Arab investors with a majority stake.