Barclays’ £4 billion cash plan

Source: Exec Digital UK

Date :16/06/2008 14:02:01

The Times newspaper is today reporting that banking giant Barclays is on the verge of raising £4 billion from overseas investors.

It reveals the bank is considering the option to raise an estimated £4 billion, after it released a statement shortly after 7am this morning, June 16th.

This comes a day after The Sunday Times reported that Barclays is looking to repair the damage done by credit crunch losses and grow the business.

The bank is said to be holding talks with six potential investors over the cash injection, and the front runners are believed to be the China Development Bank and Singaporean government-backed fund, Temasek – who both bought stakes in Barclays last year.

Barclays is said to be keen to give existing shareholders the chance to buy shares, but the sovereign wealth funds will underwrite the placing by buying up any unwanted stock.

Q1 profits fall

In May, Barclays said its first quarter profits were lower than a year earlier, and revealed a further £1 billion hit from credit turbulence. Trading in January and February was roughly in line with the previous year, but tougher credit markets impacted its performance in March.

That being said, Barclays’ profits are very much in line with expectations and it does not plan to cut its dividend.

However, it does want the funds to strengthen its capital position and help its expansion into Pakistan, as well as stepping up its businesses in the United Arab Emirates and the US.

This news puts an end to the uncertainty surrounding the bank, which has been expected to raise new capital for several weeks.

This capital raising exercise will be completed within the next fortnight and comes just after a major rights issue from both the Royal Bank of Scotland and Halifax Bank of Scotland.

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