Maravi

Barclays boasts access to liquidity

Barclays boasts access to liquidity
By Joan Chirwa
Wednesday October 15, 2008 [04:01]

BARCLAYS Bank has declared that it is well capitalised and profitable, with access to liquidity required to support its business.

In a statement made available yesterday, Barclays Bank indicated that given the strength of its well diversified business and the existing capital base, the board expects that the additional capital would be raised from investors without requiring the British government funding which has been offered to UK banks.

The bank has since come up with a plan that has been agreed with and approved by UK’s Financial Services Authority (FSA).

“Following the announcement made by the UK government on October 8, 2008 in relation to the UK banking sector capital and funding, Barclays has been in detailed discussions with the UK Financial Services Authority (“FSA”) and HM Treasury,” Barclays stated. “Taking into account the new higher capital targets which the FSA has set for all UK banks, the Board has determined that it will raise in excess of £6.5 billion of Tier 1 Capital. This would result in a pro forma Tier 1 Capital ratio as at 30 June 2008 of over 11 per cent.”

The bank stated that among the measures to be undertaken include the issue of preference shares to raise around £3 billion by December 31, 2008 as Barclays’ contribution to the commitment made by UK banks to increase Tier 1 capital by £25 billion in aggregate by year-end.

It also intends to issue new ordinary shares to raise £0.6bn ($1bn) as announced on September 17, being part of its announcement concerning the acquisition of Lehman Brothers North American investment banking and capital markets businesses (‘the Lehman Acquisition’).

“The issue of new ordinary shares to raise a further £3bn as soon as practicable after the announcement of our full year 2008 results and our intention is that this should be before March 31, 2009. The offer of such shares will be structured so as to give existing shareholders full rights of participation,” Barclays stated.

It also indicated plans to look at the bank’s balance sheet management and operational efficiencies to release at least a further £1.5 billion in equity resources.

Barclays Bank indicated that in the event that any of the proposed capital issuances do not proceed, it would, along with the other UK banks, be eligible to have access to the capital facilities announced by the UK government on October 8, 2008.
“The terms of such facilities would be negotiated at the time and may be on terms less favourable than those made available today,” stated Barclays.

Labels: BARCLAYS BANK

posted by MrK @ 3:55 PM