“From Mr Robert Jenkins.
“Sir, Antony Jenkins, the Barclays chief executive, is surprised and upset. He has been asked to make his bank a tiny bit safer a little bit sooner than he had planned (“Barclays’ threat on lending under fire”, June 30).
“Barclays currently funds only 2.5 per cent of its assets with equity. It funds the rest by borrowing. It borrows 97.5 pence for every pound of risk it takes.
“That translates to gearing of 45 times. At such levels of leverage, a 2.5 per cent erosion in the value of a bank’s assets will wipe out 100 per cent of bank equity.
“A mere 1.5 per cent hit to bank assets would leave the bank trading at 100 times leverage. How confidence inspiring is that? How long would Barclays’ creditors stick around to find out?”
Read Robert Jenkins’ full letter to the editor in the Financial Times here