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from The Great Debate UK:

Barclays’ conjuring trick

-- Margaret Doyle is a Reuters columnist. The opinions expressed are her own --

REUTERSAbracadabra! Yet again, Barclays has pulled another rabbit out of its hat. With just days to go before the end-March deadline for the bank to apply for a government guarantee of its dodgier loans, it may again wriggle out of state control.

The Financial Services Authority (FSA) has concluded, after performing "stress tests" on its loan book, that the bank has enough capital. Barclays (BARC.L) has persuaded the authorities and investors (shares are trading at over three times their January low) -- of its soundness.

But it should still buy a government guarantee. Thanks to the FSA's clean bill of health, it can bargain for keener fees than RBS (RBS.L) and Lloyds (LLOY.L). If it does join the scheme, Barclays is likely to present a smaller and more toxic book than the two state supplicants.

Moreover, Barclays is in the happy position of being able to pay cash for the insurance -- and cash buyers pay less. That is thanks to the mooted 4.5 billion pound share of its iShares exchange-traded funds business. This is a stroke of luck.