LONDON (AP) — Barclays PLC, Britain's third largest bank, said yesterday that it will not take part in the British government's programme to insure so-called toxic assets, raising fears it will need to raise billions of pounds elsewhere.

The Asset Protection Scheme allows banks to put billions of pounds worth of toxic assets, such as mortgage-backed bonds and other securities which have become unsellable due to the financial crisis, into a vehicle that will ensure they are only liable for a proportion of any losses.

LLoyds Banking Group PLC and the Royal Bank of Scotland PLC have already signed up for the programme, which the government hopes will restore confidence in the sector and restart lending that was curtailed by the global credit squeeze.

However, participation comes at a price. Lloyds paid £15.6 billion ($22.2 billion) in preference shares for government guarantees on £260 billion of investments, while RBS paid £6.5 billion to cover £325 billion of assets.

Barclays said it had weighed up the "potential benefits and costs" of participation since the programme was announced in January.

"Following further careful assessment and discussions with major shareholders, the Board of Barclays has determined that it would not be in the interests of its investors, depositors and clients to participate in the APS," the bank said in a statement to the London Stock Exchange.

Barclays made the announcement after the close of trading, but anticipation of the news had already resulted in a 14 percent fall in the bank's share price to close at 149.1 pence.

The move follows a statement by the bank on Friday that it had passed a "stress test" by the Financial Services Authority. The regulator gave the bank a clean bill of health after tests to gauge whether it had problems with its finances, giving its shares a 24 percent boost on Friday.

But analysts have suggested that the bank might still need to raise more capital to strengthen its financial position even if it sells its iShares business, which it flagged last week.

It said yesterday that talks on a sale of the San Francisco-based asset management unit were "progressing well" with a number of interested parties. Analysts have suggested the bank could raise as much as £5 billion from a deal.