John Varley has made a big contrarian bet on the future of banking. As rivals raise capital to repair balance sheets and prepare for a difficult economy, the Barclays chief executive insists things are not as bad as they seem.

On Thursday, Barclays said it had written off just £1.7bn on troubled debt instruments in the first quarter, less than many predicted. And while executives would not rule out raising fresh capital in future, Barclays stuck to its 5.25 per cent target for core Tier One capital – a key measure of balance sheet strength. The ratio stood at 5.1 per cent at the end of March, and has fallen further since.