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Tue, Jun 10, 2008 - Page 10 News List

Barclays may get outside funds for Tier 1 capital


Barclays Plc, the UK’s fourth-biggest bank by market value, may sell shares to replenish capital depleted by credit-market writedowns, two people with knowledge of the matter said.

The fund-raising would bolster the London-based company’s so-called Tier 1 capital ratio.

Barclays needs at least £7 billion (US$13.8 billion) to strengthen its balance sheet as asset markdowns increase, estimates from analysts at Lehman Brothers Holdings Inc and Citigroup Inc show.

“Many people are surprised they haven’t pushed the button by now,” said Robert Talbut, chief investment officer at Royal London Asset Management, which own Barclays stock.

Chief executive officer John Varley said as recently as May 12 that the company may have to raise capital. Since then, Barclays shares have declined 25 percent, almost as twice as much as the eight-member FTSE All-Share Banks Index.

Robin Tozer, a Barclays spokesman, declined to comment.

Barclays fell 0.8 percent to £3.35 at 10am in London trading yesterday, valuing the bank at about £22 billion.

Securities firms and banks have sought almost US$285 billion from outside investors as asset writedowns and investment losses caused by the collapse of the subprime mortgage market climbed to US$390 billion during the past year, data compiled by Bloomberg shows.

Barclays is in talks with sovereign wealth funds to gain more than £3 billion of funding, the London-based Sunday Telegraph reported.

Barclays’s Tier 1 ratio, a measure of capital strength, will be almost 5.1 percent at the end of this month, it said last month. Its target is 5.25 percent.

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