- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Analysis: APEC Nations Back Face-Saving Climate Plan
- Shift Into High-Quality Stocks Could Move Market Higher
- Drug Study Questions Effectiveness of Merck's Drugs
- Military Arms Race Dominates Dubai Air Show
- Buffett: I Haven't Bought AMEX Shares in Years
- Disaster Film '2012' Drowns Rivals at Box Office
- Cities With the Most Home Price Reductions
- Cramer: 5 Earnings Reports to Watch Next Week
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
- CNBC Video: Warren Buffett & Bill Gates - Keeping American Great
- U.S. Stocks Rally for the Second Straight Week
- Dollar is Not Plunging—So 'Calm Down': Market Strategist
- Strategists Say Markets Have More Upside — But How Much?
- Hirschhorn: Risk-Averse Traders
- Roginsky: A Funny Thing Happened on the Way to Financial Reform
- This Year's Biggest Thanksgiving Leftover: Cash
- TV Series Inks Unique Deal For Fight
MOST SHARED
- U.S. May Wind Up Green With Envy
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
- Japan Third Quarter GDP Jumps; 2010 Growth May Slow
- Analysis: APEC Nations Back Face-Saving Climate Plan
- Disaster Film '2012' Drowns Rivals at Box Office
- The Cost of Thanksgiving Dinner 2009
- For Investors, The New Green Looks To Be White
- Dipping Into Green Investing
- Sustainability Indices Sprouting Up
- Stronger Yuan Needed for Global Rebalancing: IMF Chief
Barclays said it plans to sell billions of pounds worth of shares to new and existing shareholders, sending its shares soaring on Monday as investors celebrated the move to boost its stretched balance sheet.
![]() |
AP |
Britain's third biggest bank said it was considering issuing new equity, but declined to comment on the amount it hoped to raise.
A weekend newspaper report said it would raise 4 billion pounds ($7.8 billion) from sovereign wealth funds in a deal that could be completed in the next two weeks.
Barclays shares went up by 3.5 percent to close at 329 pence after hitting 358p, to be one of the biggest FTSE-100 gainers.
The shares fell to a 10-year low of 293p last week on concern its balance sheet was too stretched and growth was slowing.
Keefe, Bruyette & Woods analyst James Hutson said the placement and pre-emptive rights issue outlined by Barclays "would go a good way towards drawing a line under the market's current capital concerns."
Barclays said in a brief statement that its profit in May was "well ahead" of the monthly run rate of 2007, which was 590 million pounds, providing reassurance that any more writedowns it has taken have been modest.
There has been persistent speculation that Barclays is seeking to raise billions of pounds from outside investors to shore up its capital position.
It is expected to structure a deal that will bring in cash from sovereign wealth funds and other investors but not dilute existing shareholders.
That could see it give shareholders the chance to buy the same percentage of shares in the placing on the same terms offered to new investors, but it will be underwritten by the sovereign funds.
The shares could be placed at a premium, or a discount of up to 10 percent.
The mechanism should allow it to sidestep UK pre-emption rights guidelines that make it hard to sell a stake of over 5 percent to an outside investor.
Well Received
Analysts said the structure of the deal should see less dilution for investors than under a rights issue, it would remove the threat that unwanted stock is placed in the market, and avoid the volatile trading in shares during rights periods.
Barclays has one of the thinnest capital cushions in Europe and has so far not followed rivals in raising funds.
Royal Bank of Scotland and HBOS are repairing capital with big rights issues.
It has taken a more modest hit from credit crunch losses than other banks but its capital adequacy ratio -- with a core Tier 1 capital ratio of 5.1 percent at the end of 2007 -- is now one of the lowest.
The bank wants to raise its core tier 1 capital ratio above 5.25 percent.
Each billion pounds raised would lift the ratio by about 0.25 percentage points, so its ratio would rise to near 6 percent if it confirms a 4 billion pound fundraising and writedowns have been relatively modest.
Barclays has lost just over $5 billion from assets tarnished by the U.S. subprime housing crisis and credit crunch, less than a third of the hits taken by RBS and UBS.
"There is some relief in the market -- they are raising capital and it's smaller than some had expected," said a fund manager, who asked not to be named.
"This may not draw a line under the issue -- they may have to come back to the market at some point and that goes for other banks too." Investors in Barclays could include China Development Bank and Singapore's Temasek, which both bought stakes at far higher prices last year.
The Sunday Times said the bank was likely to choose three outside investors from six it was talking to.
In its statement Barclays said its investment banking and investment management (IBIM) profits in May were in line with a year before, which analysts at Deutsche Bank said was "an extremely strong result" given the difficult capital market conditions and the strong year-ago performance.
Barclays said it had "continued to deliver strong growth in profits" in retail and commercial banking last month.
Its profit is expected to fall about 18 percent this year to 5.7 billion pounds, according to the average forecast from 23 analysts polled by the bank.
- Where, what, how.
- Warren Buffett and Bill Gates spoke to Columbia students, and Buffett made the students a startling offer.
- For the chief of cable company Comcast, growth has been about making deals – generally very large deals.
- Some companies may start using insurance to shift carbon risk from their balance sheets to maybe... yours?
- The president and founder of Genesis Today wants to improve America’s health, and thinks Wal-Mart can help.
- Switzerland's privacy watchdog is taking legal action to force Google to make changes to its Street View service.












