Denial

The Daily Mail reports that Barclays is thinking of trying one last attempt to raise private capital before tapping government offers to recapitalise them:

"Barclays is hatching a plan to bolster its capital base by £3billion by offering existing investors first refusal on preference shares before seeking cash from the government's £50billion rescue fund.

It is thought the bank is talking with backers, including Middle Eastern and Asian funds like Qatar Investment Authority, China Development Bank, and Singapore's Temasek, about buying the stock.

However, if they rebuff the plan, Barclays ... would go to the taxpayer-backed capital pool."

Why does Barclays think it is better off with state-owned money from the Middle East or China rather than UK state money? Because they think the UK taxpayer is a bit hard - wanting to curb bonuses and whatnot - whereas they think that Middle East and Qartari sovereign funds will let them continue as before.

They are in denial at the sea-change that has taken place over the last week. Things are not going to be able to continue as before. The sell-off in the western markets shows that ordinary shareholders (and foreign sovereign funds) are as leery about risks and excessive behaviour as the British taxpayer.

The Darling plan depends on British banks facing up to reality post haste and tapping the funds he has made available. It's regrettable that the boards of companies like Barclays are still in denial, and by delaying, putting their ordinary shareholders, bondholders and customers in jeopardy. Boards that delay too long in facing reality should walk the plank - and bow in public and express deep regret for their foolishness.