Barclays (BCS): A Ray Of Sunshine

Barclays (BCS) proved that not all earnings at global money center banks have to be a disaster. The company beat forecasts and posted a profit for the second half of last year.

Barclays did get a little help because it cut bonuses for many of its employees by 50%. If it can repeat that every year, it may stay in the black for a long time.

Barclays (BCS) proved that not all earnings at global money center banks have to be a disaster. The company beat forecasts and posted a profit for the second half of last year.

Barclays did get a little help because it cut bonuses for many of its employees by 50%. If it can repeat that every year, it may stay in the black for a long time.

According toReuters, 2009 is shaping up well. Barclays had a good start to the year with the performance of its Barclays Capital investment bank arm “extremely strong.”

The success of Barclays should offer some hope to Congress and the Treasury. Once the British bank got passed some of the losses from toxic assets, the remainder of its busnesses have started to post at least reasonable performances. They are hardly robust by the standard of two years ago, but they are probably not anemic enough to push the bank back to the point where it requires additional bailout money.

Barclays is the first evidence that, if the US government can use its own capital combined with private equity to buy the worst paper from American banks and allow them to jettison the boat anchor of quarterly losses which may extend on for the rest of the year, that they can become viable. That viability may never be what it was before the mortgage backed securities debacle, but fear of bank collapses may begin to fade into the past.

Douglas A. McIntyre