Eagle or duck?

29 May 2008 By George Hay Follow @gfhay

The UK s third largest bank may have avoided following its rivals in raising new capital so far. But investors aren t impressed. The shares are being derated even faster than those of HBOS, which has faced the music already. The market seems to fear an eventual rights issue.

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Consensus figures from analysts covering Barclays have fallen twice in the last month.

The bank contacted analysts on May 13 to inform them that consensus estimates for 2008 earnings per share had fallen 15% to 58p. The update came two days before Barclays' interim management statement where it wrote down £1.7bn of credit exposure, partially offset by a £300m gain from widening credit spreads.

On May 28, Barclays informed analysts that the 2008 consensus had fallen a further 8% to 53.9p in the wake of the results. Panmure Gordon is predicting eps of just 34.2p, because it thinks Barclays has £4bn of further impairment charges this year. UBS, in contrast, estimates 59.6p.

Barclays now trades on seven times 2008 forecast earnings, and its shares have fallen 20% in the last month. RBS trades on 6.5 times expected 2008 earnings and shares have fallen 35% in the last month. HBOS trades on 5.6 times expected 2008 earnings and shares are down 15% in the last month.

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