Independent and profitable: just what Barclays chief executive John Varley wanted for the bank and its shareholders. His detractors doubted he could steer clear of UK government bail-outs, yet he successfully raised capital from Gulf worthies instead, albeit trampling on shareholders’ pre-emption rights in the process. The subsequent sale of iShares has lifted Barclays’ core tier one capital ratio to 7 per cent, and it has passed the Financial Services Authority’s stress test, ducking the government’s asset protection scheme. As a bank with an increasingly global business, freedom from government meddling was essential.

Mr Varley’s strategy has worked so far: a robust contribution from Barclays’ investment banking arm Barclays Capital – buoyed by its absorption of Lehman Brothers’ North American operations – drove a 15 per cent increase in first quarter profit before tax to £1.4bn, in spite of £2.3bn of credit market write-downs. Barclays even plans to pay third- and fourth-quarter cash dividends – a far cry from the woes of state-controlled rivals Lloyds Banking Group and Royal Bank of Scotland. Yet the surge in fixed income activity at Credit Suisse, Deutsche Bank, BNP Paribas, Société Générale and now Barclays raises the concern that the resurgence in investment banking earnings could be a flash in the pan. Barclays Capital, which derived £2bn of its investment bank’s £5bn gross income from such activity, even warned of the dangers of extrapolating from the figure.