Tuesday 19 June 2018

Barclays boosts capital with $9.4bn issue

London, October 5, 2013

Barclays has completed its £5.8 billion ($9.4 billion) fundraising to meet a capital shortfall identified by its regulator, after almost 95 per cent of the British bank's investors stumped up more cash.

Barclays launched its rights issue three weeks ago, prompted by the British regulator's demand that it improve its leverage ratio - a measure of its capital to assets - to three per cent by mid-2014.

Barclays said bookrunners for the offer sold the shares that were not taken up by investors - worth £463 million - at 268 pence apiece, or a 1.8 per cent discount to Thursday's close.

The bank also plans to sell £2 billion of bonds that convert into equity if the bank hits trouble and to shrink the balance sheet of its investment bank to help it meet its leverage ratio target.

The rights issue was the biggest by a British bank since 2009 and raised the equivalent of 15 per cent of Barclays' market value.

Antony Jenkins, who took over as chief executive a year ago, is trying to rebuild Barclays' reputation after a string of scandals. He said the rights issue would deal "quickly and decisively" with the British regulator's demands.

Investors have broadly welcomed his turnaround plan, although he still faces challenges to improve profitability and tackle a raft of legacy issues. The rights issue forced him to push back his target to deliver a return on equity above about 11.5 per cent by a year to 2016.

A slowdown in income from selling bonds and interest rate products, the core business for investment banks, will hurt third-quarter profits across the industry.

Barclays' rights issue prospectus also said it faced a £50m fine from Britain's Financial Conduct Authority for its failure to adequately disclose fees it had paid Qatari investors over the last five years.

Those fees, linked to fundraising in 2008, continue to be investigated by other authorities in Britain and the US.

Qatar Holding invested £5.3 billion in two fundraisings. It is still Barclays' biggest shareholder with a 6.3 per cent stake and subscribed to buy more shares in the rights issue to maintain its stake.-Reuters

Tags: capital | Barclays |


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