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Barclays reels from bad debts
LONDON, England (CNN) -- Barclays, Britain's fourth-biggest bank, saw it stock fall sharply after it warned that pretax profit this year would be at the "lower end" of market forecasts. The bank's stock, which has fallen about 20 percent this year as bad loans rise in tough trading conditions, dropped to 27 pence, or 6.1 percent, to 424 pence in early London trading on Tuesday. Barclays (BARC) has already said it will set aside £1.3 billion ($2 billion) for possible bad loans this year. The bank blamed a fall in first-half profit, back in August, on bad debt charges resulting from the economic crisis in Argentina and loans to the U.S. telecoms sector. Barclays has also suffered from a fall in the value of investment, in line with many other banks which have invested heavily in the stock markets. "For the full year, profit before tax is currently expected to be within existing market forecasts, although at the lower end of the range,'' Barclays said in a trading statement on Tuesday. Analysts expect Barclays to report 2002 pretax profits of between £3.198 billion and £3.680 billion, the bank said. This compares with a restated 2001 profit of £3.425 billion with the average forecast for 2002 profits at £3.419 billion. CEO Matthew Barrett said in the statement: "Although the trading environment remains difficult, our performance in the first nine months remained resilient." Revenue at its investment banking arm Barclays Capital was flat as difficult economic conditions left many companies unwilling to consider raising new money, mergers or acquisitions. "Barclays Capital provisioning reflected the continuing turbulence in certain areas of the large corporate environment,'' the group said. Barclays' assessment of the trading environment sent the London FTSE 100 benchmark index sliding 0.5 percent to 4,130.3 points early on Tuesday, while other European markets edged higher. Rival banks, Lloyds TSB (LLOY) slipped 2.2 percent to 533 pence and the Royal Bank of Scotland (RBOS) slid 2.5 percent to 1,589 pence.
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