Bank prepares for trading of new shares after being ordered to make itself less vulnerable to future financial shocks
Barclays has chosen the inauspicious date of Friday 13 September to fire the starting gun on a near £6bn cash-raising after the bank was ordered by the regulator to make itself less vulnerable to financial shocks.
Investors have been told they must be on the share register by next Friday to take up Barclays' offer of one new share at 185p for every four currently owned. The price is a 40% discount to the value of the shares before the money-raising was first announced.
Barclays, which was told by the Prudential Regulation Authority in July it must plug a £12.8bn hole in its balance sheet, said it would be issuing a prospectus for the rights issue in due course but gave no exact date.
The new shares are scheduled to start trading on 3 October after what would be the largest rights issue by a bank since 2009 when the country's lenders were engulfed in the worst of the recent financial crisis.
Barclays also plans to issue £2bn of bonds, shrink the size of the bank by £2.5bn and make up the rest of the capital shortfall by holding back earnings rather than paying them out to shareholders or as staff bonuses.
Antony Jenkins, who came as chief executive a year ago, said in July that the cash call was part of a "bold and balanced plan" to bolster the bank's leverage ratio – a measure of the riskiness of its lending – from 2.2% to 3% by June 2014.
Barclays avoided the need for a government bailout in the financial crisis, unlike competitors Lloyds and Royal Bank of Scotland, but still announced a net loss of more than £1bn for 2012.
Shares in Barclays rose 1.5% last night but there had earlier been nervousness about the rights issue when the man who would have been at the centre of it, finance director, Chris Lucas, announced plans to step down on 16 August. The 52-year-old was expected to leave next year but said he was departing early due to ill health.
Lucas is one of four current and former directors being investigated by City regulators over a previous controversial cash raising from Qatar that made it possible for the bank to avoid a government bailout. He is being replaced by Tushar Morzaria, who is based in New York, and was expecting a long handover period with Lucas.
It is the latest personnel change at the top of the bank since Jenkins was promoted to take over from Bob Diamond, who quit following a £290m fine on Barclays for rigging Libor inter-bank lending rates.
The former chairman, Marcus Agius, and chief operating officer, Jerry del Missier, also left a year ago.
Jenkins has been desperately trying to open a new chapter for the scandal-hit Barclays, which in the last six months of 2012 was the most complained about high street bank in Britain. He has introduced a range of strategies but some aspects of the bank's past are proving hard to shrug off. In July US regulators upheld a fine on Barclays and four of its traders of $453m (£300m) for allegedly manipulating electricity prices in California. The bank said it intended to "vigorously defend this matter" but one analyst warned that the decision by the Federal Energy Regulatory Commission could derail a deferred prosecution agreement signed with the US Department of Justice over the bank's involvement in Libor-rigging.
Article Source : http://www.guardian.co.uk
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