Barclays’ balance sheet balloons

Barclays Bank’s accounts for last year showed that they did make a profit of £6.1bn, albeit 14% lower than their profit for the year before. However the Times’s investigation of their balance sheet shows an extraordinary statistic – that their assets and liabilities each mushroomed to more than £2 trillion, both now larger than UK gross domestic product at £1.4 trillion. This is mostly because of hundreds of billions of dollars of derivative positions acquired alongside the September acquisition of the North American assets of the bankrupt Lehman Brothers. So far Barclays has avoided the need to seek funds from the government to shore up its finances – instead they raised £5.8bn of vital new capital from the state investment funds and royal families of Qatar and Abu Dhabi – but with only £29 billion of shareholders’ equity, it would need only a 1 per cent deterioration in the bank’s £2.05 trillion of assets to wipe out its capital cushion of £17 billion and require it to seek fresh capital.

As the Times’ article says, the size of its balance sheet would pose problems (to say the least!) for British taxpayers and affect the perceived creditworthiness of the UK Government in the unlikely event that the bank were to fail. If the government is to successfully raise the money to fund the budget deficit then its perceived creditworthiness is all-important - how many unlikely events have we seen in the last year or so?

Unit 2 Macro: UK Trade in Services [20 May 2012]
Unit 2 Macro: Positive and Negative Multiplier Effects [20 May 2012]
Unit 2 Macro: The Importance of Productivity [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [16 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Trade and Balance of Payments Glossary [5 May 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Tullow Oil and African Development [25 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Unit 3 Micro: Quiz on Business Costs and Profits [11 Apr 2012]
Unit 3 Micro: Evaluation Question on Supermarkets [11 Apr 2012]
Unit 3 Micro: Revision on Monopoly Price and Output [6 Apr 2012]
Unit 3 Micro: Monopoly and Economic Welfare [6 Apr 2012]
Unit 1 Micro: Revision on Price Elasticity of Supply [5 Apr 2012]
Unit 2 Macro: Revision on Interest Rates and the Exchange Rate [3 Apr 2012]
Unit 1 Micro: Revision on Producer Subsidies [2 Apr 2012]
Unit 1 Micro: Nottingham introduces workplace parking tax [1 Apr 2012]
Posen on slower growth in the UK compared to the USA [30 Mar 2012]
Unit 2 Macro: Revision on Capital Investment [30 Mar 2012]
Unit 3 Micro: EU Imposes Further Price Cap on Mobile Phone Companies [29 Mar 2012]
George Buckley at the Millfield Economics Society [28 Mar 2012]
Beyond the Bike - Monetary Policy in Africa [28 Mar 2012]
Unit 4 Macro: Evaluating 3 Years of Quantitative Easing [27 Mar 2012]
Unit 1 Micro: Breaking Down the Cost of Gas [4 Mar 2012]
Mortgage interest rates, LIBOR and game theory [3 Mar 2012]
A return to Glass-Steagall to prevent another crash? A lesson from economic history. [17 Feb 2012]
Unit 4 Macro: King on the UK Economy [15 Feb 2012]
Unit 1 Micro: Public Goods [11 Feb 2012]
Unit 1 Micro: Can the UK Computer Games Industry Grow [24 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
Unit 4 Macro: UK Bond Yields Reach Record Lows [11 Jan 2012]
Unit 2 Macro: Factors Driving Business Investment [10 Jan 2012]
Unit 2 Macro: Quantitative Easing in the UK [8 Jan 2012]
2012 - Carnage on the High Street [28 Dec 2011]
Unit 3 Micro: Sub Normal Profits - BP Leaves the Solar Industry [21 Dec 2011]
Unit 2 Macro: Mobile Phones and African Economic Growth [18 Dec 2011]
Unit 3 Micro: Patent Wars- A Touchy Subject for Apple [16 Dec 2011]
Unit 3 Micro: Brand Loyalty in Mobile Phones [27 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Eurozone crisis - a selection of resources [12 Nov 2011]
Unit 3 Micro: UK Executive Pay - All in it Together? [29 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 Oct 2011]
Unit 1 Micro: Exercise on Market Supply [26 Sep 2011]
Greek debt decision tree [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Another Economics prop - for remembering MC=MR! [15 Sep 2011]
Mixing with the Nobel Economists [4 Sep 2011]
Unit 1 Micro: Cotton Prices and the Retail Price of Clothing [13 Jul 2011]
Unit 1 Micro: Economics of Volatile Corn Prices [12 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Unit 3 Micro: Oligopsony - Dairy Losses Drive Farmers from the Fields [10 Jul 2011]
Where there’s muck there’s brass [6 Jul 2011]
AS Macro Key Term: Demand Pull Inflation [24 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Recession [23 May 2011]
AS Macro Key Term: Spare Capacity [23 May 2011]
A2 Micro: Competition Policy [20 May 2011]
A2 Micro: Oligopoly and Collusion [20 May 2011]
A2 Micro: Oligopoly [20 May 2011]
A2 Micro: Price Discrimination [19 May 2011]
A2 Micro: Entry Barriers in Markets [19 May 2011]
Unit 3 Micro: Monopsony Power in Markets [19 May 2011]
A2 Micro: The Importance of Profit [19 May 2011]
A2 Micro: High and Low Marginal Cost Products [19 May 2011]
A2 Micro: Consequences of Price Discrimination [19 May 2011]
A2 Micro: Examples of Price Discrimination [19 May 2011]
Unit 3 Micro: Perfect Competition [19 May 2011]
A2 Micro: Competition and Efficiency [19 May 2011]
A2 Micro: Outsourcing [18 May 2011]
A2 Micro: Business Growth [18 May 2011]
A2 Micro: Innovation and Economic Policies [18 May 2011]
A2 Micro: Innovation Efficiency and Welfare [18 May 2011]
A2 Micro: Moving Away from Profit Max [18 May 2011]
A2 Micro: Minimum Efficient Scale [18 May 2011]
A2 Micro: Economies of Scope [18 May 2011]
UK Economy Update: What Mervyn Said [11 May 2011]
AS and A2 Macro Revision: Keynesian Economics [28 Apr 2011]
A2 Micro: EU Aviation - State Aid and State Ownership [28 Apr 2011]
Wiki Revision: A to Z on Monopoly [23 Apr 2011]
A2 Micro: Changes in Costs and Profits [23 Apr 2011]
Rise in investment could kick start recovery [18 Apr 2011]
Key AS Micro Terms: Competition and Monopoly [17 Apr 2011]
Key AS Micro Terms: Costs and Profits [16 Apr 2011]
Smartphones and Creative Destruction [16 Apr 2011]
A2 Macro: Back to Roubini - a Year On! [11 Apr 2011]
OCR F585 June 2011: Euro Area on the Rocks? [11 Apr 2011]
ECB breaks rank and raises interest rates [7 Apr 2011]
AS Macro Key Term: Expansionary Monetary Policy [4 Apr 2011]
A2 Micro: Updates on Competition Issues [2 Apr 2011]
AS Micro Revision: Banana Prices [1 Apr 2011]
Why is the Yen appreciating? [18 Mar 2011]
AS Macro Revision: Investment Spending [12 Mar 2011]
Ireland - Mass Unemployment and Shrinking GDP [10 Mar 2011]
Tenner Tycoon - enterprise competition [7 Mar 2011]

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