British bank, Barclays PLC (LSE: BARC) climbed as much as 12% in trading after the company confirmed that it passed a ‘stress test’ carried about the Financial Services Authority (‘FSA’).
The test was designed to determine the resilience of the bank’s balance sheet and profit and loss account to credit risk, market risk and economic conditions. Shares in Barclays hit an all time low of 51 pence earlier this month on mounting speculation that it could become partially nationalised to protect it from further write-down’s. However in recent weeks, news of the potential sale of its Exchange Traded Funds (ETF’s) business and more positive sound bites from the US banking industry turned sentiment towards the bank.
Today Barclays confirmed what the Financial Times reported late last night – that it capital position and resources were expected to meet the capital requirements published by the FSA in January.
Shares in Barclays have climbed 300% in recent weeks, marking an excellent run and handsomely rewarding savvy investors who picked up the shares near their lows. Today’s news also deals a further blow to the reputations of Royal Bank of Scotland (LSE: RBS) and Lloyds TSB Group (LSE: LLOY) who are now majority owned by the taxpayer after suffering massive losses on their own balance sheets.