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Barclays Raises $12 Bln from Mideast, Others | ASHARQ AL-AWSAT English Archive 2005 -2017
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LONDON, (Reuters) – British bank Barclays Plc is raising 7.3 billion pounds ($12.1 billion) from investors from Qatar, Abu Dhabi and elsewhere to allow it to avoid taking UK 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 percent until June 2019. Warrants representing billions more pounds could also be issued.

Concern that the cost of the funding will be higher than capital available from the government and a sale of convertible shares in the market dragged Barclays shares lower after an initial jump, dealers said. By 1022 GMT the shares were down 9 percent at 186 pence.

Barclays said the coupon on the RCIs is tax deductable and after tax it will cost approximately 10 percent. After adding in the value of the warrants the cost should be similar to preference shares other banks are expected to issue, it said.

Britain’s second biggest bank is raising up to 3.5 billion pounds from Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi’s royal family. That could give him a 16.3 percent stake in the bank.

Barclays shares initially jumped as investors welcomed the bank’s ability to raise cash in tough markets and as it said group profit in the first nine months of this year was “slightly ahead” of the same level a year earlier.

It wrote down 129 million pounds on structured credit market assets for the third quarter, but said 1 billion pounds of gains on debt it carries were reversed in October.

Barclays is also raising up to 2 billion pounds from Qatar’s sovereign wealth fund and 300 million from a member of Qatar’s royal family. That could leave Qatar investors holding up to 15.5 percent.

Barclays’ investor base has been transformed in the past two years, as it has raised funds from investors in China, Singapore and Japan as well as the Middle East and the bank expects to benefit commercially from the links as well as getting cash.

“There has been a significant shift in the availability of capital and economic power in the world over the last five years and we’re ensuring we’re aligned with those changes,” said John Varley, Barclays chief executive.


The bank is seeking to raise up to a further 1.5 billion pounds from the sale of mandatorily convertible notes (MCNs) with existing and other investors.

Asked on a conference call whether Barclays has enough capital to avoid more fundraising, Varley said: “Yes, we have what we need.”

Barclays earlier this month turned down an offer of government funds under Britain’s 400 billion bailout package and said it would raise capital privately.

Rivals Royal Bank of Scotland, Lloyds TSB and HBOS have agreed to take up to 37 billion pounds of taxpayers’ funds to help rebuild balance sheets hit by the credit crisis and prepare for possible recession.

Barclays said when the government’s recapitalisation plan was announced that it planned to raise about 6.5 billion pounds, 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 percent, analysts estimated, up from 6.3 percent after a 4.5 billion pounds fundraising in July.

It will lift its overall tier 1 ratio to above 11 percent from July’s 9.1 percent.

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.

The bank expects to gain a competitive advantage by raising capital privately, while RBS and others will have the government as a major shareholder.