The impact of the credit crunch has forced Barclays to take a further £1bn writedown on assets and warn shareholders that profits for the first quarter of 2008 will be less than last year.

But the bank stopped short of asking shareholders for additional cash through a rights issue, although it did keep this option open in a statement.

In recent weeks, Royal Bank of Scotland, HBOS and Bradford & Bingley have all been forced to ask investors for additional funds to bolster their balance sheets after being forced to write off large amounts.

And with the latest inflation report suggesting rates have hit 3.0%, the prospect of more interest rate cuts to help the banks appears less certain.