John Varley, chief executive of Barclays, insisted yesterday that he would beat a rival Royal Bank of Scotland-led consortium in the long battle to buy ABN Amro, despite stagnation in Barclays’s share price.

Announcing a 12 per cent jump in Barclays’s interim pretax profits, Mr Varley said that an upward trajectory in Barclays shares was vital to his 37 per cent cash bid for the Dutch bank.

Barclays shares need to hit about 790p to close the gap between its €67.5 billion (£45.5 billion) offer and the €71.1 billion, 93 per cent cash bid by the RBS consortium.

Since reaching 750p more than a week ago, Barclays shares have hovered between 677p and 700p in recent days. They closed yesterday at 686p, up 8½p. However, Mr Varley said that there was ample time for improvement. “The decision doesn’t have to be made today, it’ll be made by ABN shareholders in late September or October,” he said.

Barclays said yesterday that it had received clearance from the Financial Services Authority, Dutch regulators and the US Securities and Exchange Commission to proceed with a £2.4 billion buyback of its shares that will start on August 6. The buyback, to run until November, is designed to prevent dilution of the stock after the issue of new Barclays shares to the China Development Bank and Temasek, the Singapore state investor.

Barclays yesterday announced a £4.1 billion pretax profit for the half year to June 30, up from £3.6 billion last year, despite hits from refunded overdraft fees and exchange rates.

The bank paid out £87 million in compensation to customers who complained about unauthorised overdraft charges, but reported a 9 per cent fall in bad unsecured loans to £277 million.

Pretax profits from Barclaycard, the bank’s credit card business, fell by 17 per cent to £272 million because of a loss on the sale of the Monument card business. The comparative figures from 2006 had been flattered by a £38 million one-off gain on property.

Profits from Barclays’s international retail and commercial banking arm fell by £60 million to £452 million, despite a good performance by Absa, the South African subsidiary, because of depreciation of the rand.

The group’s results were boosted by a record performance at Barclays Capital, the investment banking division, which drove its pretax profit up by 33 per cent to £1.6 billion in the first half.

Bob Diamond, the head of BarCap, said that the division’s diversified operations had enabled it to pull through the volatile past few months, but he added that the market for investment in sub-prime loans would not recover for up to two years. “It will take some time for the sub-prime market to work through the excesses of the recent past,” he said. “This is a serious market dislocation in sub-prime.”

Mr Diamond said that he was comfortable with BarCap’s exposure to hedge funds that invested in sub-prime assets, but he declined to clarify its exposure to two Bear Stearns hedge funds that collapsed last month.

Mr Diamond said that recent jitters in the credit markets reflected a risk reassessment. However, he expects the market for private equity loans to recover in the autumn.

“We would expect at some point over the next two to three months to see that market at more normal volume levels,” he said.

Mr Diamond pointed out that Barcap’s results so far are better than during the corresponding period last year. This means that he could be in line for another bumper payday. In March, it emerged that he had netted £22 million in annual salary, shares and bonuses.

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