Barclays is raising £7.3 billion from investors from Qatar, Abu Dhabi and elsewhere to allow it to avoid taking government rescue cash, it said on Friday.
The fundraising is being made through a range of complex capital instruments, which could see Middle East investors owning about one-third of the bank. An issue of reserve capital instruments (RCIs) will pay annual interest of 14% until June 2019. Warrants representing billions more pounds could also be issued.
The country’s second biggest bank is raising up to £3.5 billion from Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi’s royal family. That could give him a 16.3% stake in the bank. Barclays shares initially jumped after the news as investors welcomed the bank’s ability to raise cash in tough markets and an adequate trading update, but later eased back. At 0930 GMT they were unchanged at 205-1/4 pence after touching 228p.
The bank said group profit in the first nine months of this year was “slightly ahead” of the same level a year earlier. It took a net writedown of £129 million from credit market writedowns for the third quarter, but said £1 billion of gains on debt it carries were reversed in October. Barclays is raising up to £2 billion from Qatar Holding and £300 million from Challenger, an investment vehicle of a member of Qatar’s royal family. That could leave Qatar Holding a 12.7% stake and Challenger with 2.8%.
Barclays said when the government’s recapitalization plan was announced that it planned to raise about £6.5 billion, with 3 billion from the sale of preference shares and the rest from selling ordinary shares. It had until the end of March to raise funds. Those sales were expected to increase the bank’s core tier 1 capital ratio to about 8%, analysts estimated, up from 6.3% after a £4.5 billion fundraising in July. It will lift its overall tier 1 ratio to above 11% from July’s 9.1%.
Barclays has lost billions of pounds from credit-related asset writedowns and is faced with a sharply slowing UK housing market and economy, but it has fared better than many rivals. It has raised funds from investors in China, Singapore and Japan as well as Qatar. The bank expects to gain a competitive advantage by raising capital privately, while RBS and others will have the government as a major shareholder. (Reuters)