Barclays to offer £6bn shares

LONDON. — Barclays will launch a £5,8 billion rights issue next week to help meet a regulatory demand to plug a hole in its balance sheet, the British bank said yesterday. The bank will sell the new shares on September 13 priced at 185 pence each— a steep 40 percent discount to the price of its traded stock just before it announced the rights issue on July 30.

Barclays shares were trading 0,52 percent lower at 283,6 pence in late morning deals on London’s benchmark FTSE 100 index, which was down 0,50 percent at 6 435,92 points.

The sale of shares worth the equivalent of US$9 billion or 6,9 billion will help to plug a balance sheet gap totalling £12,8 billion.
Barclays said that the new shares would be available from the close of business a week tomorrow.

In June, the Bank of England’s Prudential Regulation Authority, which supervises Britain’s banking sector, ordered Barclays to find £12,8 billion of additional capital following a review of top lenders.

The PRA watchdog told Barclays to increase the amount of equity it holds against total assets, a measure called the leverage ratio and which provides banks with a cash buffer in case of future financial crises.

Barclays said that the rights issue, and separate measures to shrink parts of its business and maintain current profit levels, should push its leverage ratio to above 3 percent, the minimum required by the PRA, by June 2014.

Ian Gordon, an analyst at Investec financial group, told AFP that the Barclays would probably eventually return the new capital from the rights issue to shareholders, arguing that it should have not been required to increase its buffer.

“I do not recognise the existence of a £12,8 billion hole,” he said. “The rights issue is entirely the consequence of the implementation of the arbitrary and bank-specific June 2014 deadline for meeting a new and contrived measure of leverage.”

Gordon added: “This will be the biggest UK bank equity-raising since HSBC and Lloyds in 2009, yet this is purely transitory       . . . raising capital that is not required under Barclays pre-existing 2015 capital plan, only to give it back again (to shareholders) after June 2014.” —AFP.