Barclays bank shares in freefall
Barclays bank shares fell again for the ninth straight day amid concerns that the bank is running short of capital and will need a fund-raising exercise in the short to medium term. Despite chief executive John Varley stepping into the breach and suggesting the bank does not need a fund-raising exercise, investors appear to think otherwise. So what exactly is going on?
The 8p fall has taken shares down to 51.2p amid concerns that the bank is being targeted by short sellers who caused so much trouble in the banking sector last year. It has been revealed that Lansdowne Partners for one made a £9 million profit shorting Barclays bank shares over a four-day period this month. This kind of profit from this particular investment strategy is something which Gordon Brown has been fighting against for some time. It would appear that the emergence of short sellers after the ban was lifted makes it more likely that a long term or permanent ban will be introduced at some stage.
There is a very real threat that the situation with Barclays bank could become a self-fulfilling prophecy as customers become edgy and investors continue to sell the shares. Quite what the bank can do to reassure investors and pump life into the share price very much remains to be seen.
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