Barclays silence spooks the City

BARCLAYS unnerved investors as it failed to mention collapsed US energy group Enron in a routine year-end trading statement. 'Enron is not a significant issue for us,' a spokesperson said later. 'We are quite comfortable with our position.'

Shares in the banking group fell 51p to 2099p as investors worried about the fallout from Enron's collapse. Bankruptcy filings for the US group named Barclays as a trade creditor to the tune of $126m (£88m). But a Barclays spokeswoman said: 'This is a bald figure. It does not take account of syndication or offsetting of any kind.'

Barclays also unveiled a 20% increase in likely provisions against bad and doubtful debts to around £600m for the second half of this year. That compares with £498m in the first six months.

The difficult economic environment sent third-quarter provisions higher, compared with the first two quarters of the year. Business banking, Barclays Capital and Barclaycard were particularly affected.

Barclays said, however, that the total provision figure for the full year of £1.1bn was in line with forecasts it made at the half year.

It also suggested that much of the provision increase was due to business growth and should not be interpreted as reflecting a large deterioration in trading conditions for companies to which it had lent money. 'We have put on a lot of new business and we automatically provide against it just in case,' said the bank which is led by chief executive Matthew Barrett.

Group income was robust in the third quarter, rising more strongly than in the quarters in the first half. Consumer, mortgage and credit card lending were all well ahead and Barclays Capital experienced strong growth in net interest income. The division, which performs debt and trading functions, said dealing profits rose sharply in the third quarter, but were likely to fall in the final three months of the year.

Fee levels were higher than in the first half but lower than this time last year due to reduced market activity. Expensive new staff raised costs sharply within Barclays Capital. The hirings led to a significant cost increase at group level but the bank remains on target to deliver business-as-usual savings of £1.15bn for the four years to the end of 2003.

Business banking growth tailed off in the three months to the end of September, while the private client and long-term assurance divisions were hit by market volatility.

British banks count cost of Enron