Barclays in government funding talks - commercial mortgages

16 March 2009

Barclays has revealed that it has been in talks with the Treasury about participating in the government's asset protection scheme in order to raise more capital.

Such a move could see the bank obliged by the government as part of the deal to lend more, something which could increase the supply of commercial mortgages.

In return, Barclays would have assets covered by the government to prevent further losses, a move Lloyds TSB and Royal Bank of Scotland have previously undertaken.

However, Barclays is also considering the sale of its fund management arm, a move that may avoid or limit its participation in the scheme.

Since receiving the government aid, Royal Bank of Scotland has pledged to lend more to businesses, as well as increasing its supply of mortgages to home buyers in Scotland.

The bank will offer an additional £16 billion to small and medium-sized businesses across the UK.