Barclays seeks to raise capital from investors

Barclays seeks to raise capital from investors
Written by Chiwoyu Sinyangwe
Tuesday, November 04, 2008 4:41:22 PM

BARCLAYS Bank yesterday announced a proposal to raise up to 7.3 billion British pounds of additional capital from existing and new strategic and institutional investors.

According to a statement released yesterday, the capital raising, which was subject to approval by Barclays shareholders, would be effected through an issue of three billion pounds of Reserve Capital Instruments, with an associated issue of warrants, and an issue of up to 4.3 billion pounds of Mandatorily Convertible Notes.

“As a result of the Capital Raising, Barclays expects to fully satisfy its commitment, as announced to the market on 13th October 2008, to raise new external capital as part of its overall plan to achieve the new higher capital targets set by the UK Financial Services Authority for all United Kingdom banks,” the statement read in part.

The Bank also stated that the capital raising would enable Barclays Bank to simultaneously achieve its tier one and equity capital issuance commitments to the Financial Service Authority (FSA) with certainty, and ahead of the previously announced timetable strengthen links with existing large shareholders and introduce a substantial new investor to Barclays.

Barclays also stated that capital raising would help to provide the opportunity for existing institutional shareholders to participate in the capital raising by subscribing for Mandatorily Convertible Notes.

And Barclays has also released its Interim Management Statement, stating that Group profit before tax for the nine months ended 30th September 2008 was slightly ahead of 2007.

It further stated that income growth was strong, and costs grew broadly in line with the rate of income growth.

“Impairment charges grew at a similar rate to the first half of the year,” stated Barclays.

“Third quarter 2008 results included a preliminary estimate of the net benefits arising on the acquisition of Lehman Brothers North American investment banking and capital markets businesses; and net losses from credit market write downs of 129 million British pounds, comprising write downs of 1.2 billion British pounds offset by 1.1 billion British pounds gains on the fair valuation of issued notes.”