Barclays Tipped To Raise Additional Capital

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Barclays PLC (NYSE:BCS) (LON:BARC) is set to reveal its capital raising plans Tuesday and provide an update of its discussions with Prudential Regulation Authority.

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Harry Wilson, Banking Editor at The Telegraph reports Barclays PLC (NYSE:BCS) (LON:BARC) has been in discussion with investors for possible launching its £4 billion ($6.1 billion) rights issue aimed to bridge a possible £ 7 billion capital hole.

Barclays to announce interim results Tuesday

News spread last weekend that Barclays PLC (NYSE:BCS) (LON:BARC) could come out with the rights issue amidst pressure from regulators to strengthen its balance sheet.

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Barclays PLC (NYSE:BCS) (LON:BARC) is set to announce its interim results Tuesday. Reports indicate that Barclays would disclose the outcome of its detailed discussions with Prudential Regulation Authority, an arm of Bank of England. Barclays is expected to announce it’s the regulator’s requirements on increasing its leverage ratio.

Barclays might need £7 billion

Some analysts anticipate in the event of the PRA requiring Barclays PLC (NYSE:BCS) (LON:BARC) to enhance its leverage ratio from 2.5 percent to 3 percent, the bank might need £7 billion of additional capital.

Consequent to several reports appearing in the press, Barclays has released a statement that the bank has been in discussions with the PRA regarding its financial and capital management plans and the bank will update the market alongside its interim results on Tuesday 30 July.

Barclay’s capital raising plans came amidst reports that Serious Frauds Office would be funded around £2 billion by UK treasury to investigate into Barclays’ emergency fundraising five years ago.

Leverage ratio date accelerated

Earlier banks anticipated that they would be required to maintain leverage ratio requirements after a few years. However, it has been reported Bank of England has decided to accelerate the leverage ratio rule’s implementation.

Earlier it has been reported that Barclays PLC (NYSE:BCS) (LON:BARC) could reveal its plans to offer new common shares besides convertible bonds. This would also facilitate the bank to more easily absorb losses in the future besides getting rid of any concerns investors might have about whether the bank has enough capital.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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