Shares in Barclays Bank were all over the place Friday, after rumours persisted that the firm was to write-down almost $21bn in US subprime lending-related assets. Speculation was rife that the bank needed to raise funds via an emergency rights issue and that CEO John Varley and / or Barclays President Bob Diamond were on the verge of resignation.
At one point Friday the stock had fallen as much as 9.1%, although it closed 2% down after shares were temporarily suspended due to the volumes being traded.
The Financial Times, however, quotes from a memo Varley sent to staff last week, in which he said that Barclays was 'awash with liquidity'. He continued, 'If there were any substance in the rumours that I have been hearing in recent days, we would have been required to have made an announcement to the stock exchange. But we have not. That silence says a lot'.
Reuters also quotes an unnamed bank spokesperson who said that 'there is absolutely no substance to those rumours'.
According to The Sunday Times, the bank is working with auditor PriceWaterhouseCoopers and is considering providing a detailed financial statement about the performance of investment banking unit Barclays Capital with its trading statement due on November 27th. Should the bank's shares continue to take a hammering (they have now dropped some 22% this month), the bank may well move the official announcement up.