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Will Barclays Bank need to go cap in hand to the government?

Just a few days ago it seemed as though results and forecasts for Barclays Bank had at least taken the short-term heat off the company. However, many analysts are now revisiting the company's capital ratios with some suggesting that billions of pounds in extra funding will be required over the next two years. While Barclays has not commented on public speculation regarding the company's financial strength, specific reference was made to this in the recent results announcements to try and allay any fears.

There have been suggestions that the UK authorities are interested in taking a stake in the business in return for injecting substantial capital to try and reinvigorate the company. However, as we saw last summer, when the company went to the Middle East for funding, Barclay's directors are very much trying to avoid any government intervention. However, as time goes by it seems almost inevitable that at some stage the UK government will need to inject significant capital into the business if the worldwide economy continues to decline. Barclays Bank is also in the throes of discussing a place in the government's assets protection scheme which could see a significant portion of potentially toxic debt taken off the balance sheet.

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