LONDON - THE CHAIRMAN of Barclays PLC, Britain's second largest bank, reckons the country's banking crisis is over as financial institutions appear to have improved their financial position.

However Marcus Agius did warn that problems remained as the 'very nasty global recession' was likely to go on for a while yet.

'I keep looking for green shoots - I don't see many,' Mr Agius told The Associated Press in an interview. 'I think we are certainly off the bottom. I think the banking crisis is over. I think the government did well and other banks who haven't had government money have recapitalised themselves like we have and I think confidence is back that the banks aren't going to fail.'

'That's terrific because that wasn't so some months ago, but we do have a very nasty global recession and everyone has to react to it,' he added.

Last autumn, Barclays opted to raise funds from Middle Eastern investors instead of accepting a government bailout, which Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC did. Many of Britain's banks had to shore up their capital bases amid mounting fears they would go under in the same way that US investment bank Lehman Brothers had earlier.

Though Britain's banks now appear to be in a more stable financial position - the stock market certainly thinks so - their earnings potential is being restricted by the deep recession. In the first three months of 2009, the British economy shrank by 2.4 per cent from the previous quarter - its biggest declines in 51 years.

And with house prices expected to fall over the rest of the year and unemployment apparently on the rise to 3 million, Britain's banks will continue to operate in a harsh economic environment for some time to come.

Mr Agius conceded that problems remain but that eventually things will improve. 'When that is, I don't know,' he said.

'Things are going to get better from here onwards, but how fast and how quickly I don't know.' Mr Agius said that the banking sector, which has faced criticism over its practices and bonus culture, will emerge stronger from the global economic crisis.

'The global financial crisis was a very traumatic moment for everybody,' Mr Agius said. 'A lot of people have had a chance to reflect deeply about the way the world operates and some good will come from it - I'm always an optimist.' -- AP