Jump to content
House Price Crash Forum
Sign in to follow this  
OscillatingWildly

Barclays Indicates 2008 Profits To Be Ahead Of £5.3bn

Recommended Posts

I have been around this forum for a little while and most of what is happening in the housing market and global economy.

I also understand that the banks have seriously screwed up on both sides of the Atlantic by lending money to those who cannot repay.

What I am not sure of is how Barclays can predict profits of more than £5.3bn and at the same time be virtually worthless. Is it because of the future losses which are (sorry Bovey!) "yet to materialise"?

BD

Share this post


Link to post
Share on other sites
I have been around this forum for a little while and most of what is happening in the housing market and global economy.

I also understand that the banks have seriously screwed up on both sides of the Atlantic by lending money to those who cannot repay.

What I am not sure of is how Barclays can predict profits of more than £5.3bn and at the same time be virtually worthless. Is it because of the future losses which are (sorry Bovey!) "yet to materialise"?

BD

In a nutshell yes.

People are afraid of 1. and either 2. or 3. :

1. Barclays' situation is much more dire than their reported profits indicate.

2. That they need capital which won't be forthcoming after their brinksmanship in the last round of capital given to the other domestic majors.

3. That the terms of the new capital raise from the government or outsiders will be so onerous that existing shareholders will be masively diluted.

Share this post


Link to post
Share on other sites
Barclays denied it faced financial problems and rushed out a statement to the New York stock exchange before trading closed. The bank, which is due to report its figures next month, said profits before tax for 2008 after all charges and costs should be well above forecasts of £5.3bn. The bank's tier one capital ratio should be 6.5% at the end of the year and the total capital ratio will be 9.1%, putting it in line with many of its peers.

Sharesprices are very fickle, based on sentiment although I do get the impression they are supposedly based on future earnings and growth.

However despite what Barclays says there are massive problems in the sector, even if they make a profit this year trading over the coming years is likely to be difficult.

Anyone that holds debt now is a potentially toxic asset.

You still have large mortgage debt defaults looming.

Mass credit card debt default

Company failures triggering bad debts

Shipping has all but come to a standstill, apparently many new cargo ships have been built/bought with bank debt and now nothing is moving meaning no revenue.

If your basing the share price on what the future holds then clearly Barclays may not be worth very much depending on it's liabilities.

You also have add into the melting pot the fact that some very clever people can manipulate share prices in the short term for a quick profit.

Share this post


Link to post
Share on other sites

http://www.guardian.co.uk/business/2009/ja...in-new-collapse

Analysts said Barclays had suffered a severe loss of confidence following speculation that it faces further losses on hundreds of billions of pounds worth of toxic ­investments. Concerns that the main City regulator had added to the bank's woes by lifting a ban on short-selling was dismissed by the government, but were leaped on by opposition MPs as an indication of government incompetence. Some City traders said the dive in Barclays shares had been fuelled by rumours of the bank's imminent nationalisation spread by short- sellers who profit from falling prices.

Hadn't quite finished reading the guardian article.

Edited by interestrateripoff

Share this post


Link to post
Share on other sites

I had started a topic on this this morning, however since I am a new member I have to wait for the mods to approve it.

My understanding is that effectively Barclays shunned the Government bail out last year, instead quoting it's fiscal position borrowed money from investors in the Arab Emirates.

Some people wondered whether they did this so that they wouldn't have to reveal their books to the FSA - and maybe some systematic mis-reporting of losses from CDO's etc would be revealed.

Hence why traders have been shorting this stock since the ban was lifted.

Time will tell if this is the UK's Enron or Lehman Brothers.

Jim

Share this post


Link to post
Share on other sites

The divergence between the share price behaviour and the purported financial performance means that overall, the market doesn't believe that the reported financial performance reflects Barclays' true position.

People can lament the actions of short sellers all they want. There is no way that short sellers can make money unless their rationale for being short has enough credibility that their actions result in lower share prices even if their methods are a little dirty. In my opinion, longs tout their positions more than shorts do : it is just more acceptable because more people are long than short.

Remember what happened to VW shares. Short selling is a very risky game and shorts tend to do a lot more research than longs as their upside is limited (shares go to zero) while their downside is unlimited (shares go to infinity). Longs have the opposite situation of limited potential losses and unlimited potential gains.

Share this post


Link to post
Share on other sites

Im so glad Barclays have no financial problems, maybe they will start lending normally again....whats that you say?...oh they already are.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.