LONDON - BRITISH banking giant Barclays is close to raising £4 billion (S$10.7 billion) in a capital-raising exercise, with existing investor Temasek Holdings likely to be offered more shares.
Chairman Marcus Agius and chief executive John Varley are expected to make a statement to the London Stock Exchange today to clarify the fund raising, Britain's The Sunday Times said.
According to the report, existing investors such as Singapore's Temasek and China Development Bank (CDB), which are sitting on big paper losses, will be offered the chance to buy into Barclays at a lower price.
Last July, Barclays raised £975 million from Temasek, which took a 2.1 per cent stake in the bank, and 2.2 billion euros (S$4.7 billion) from CDB to fund a failed bid for ABN Amro.
The new placing, to be completed within a fortnight, will involve issuing new shares to investors at a premium over Barclays' closing price last Friday of £3.18 a share, said the paper.
This would give existing investors the chance to buy the same percentage of shares in the placement, but the deal would be underwritten by the sovereign funds, the paper said.
It is thought that at least six potential investors are in talks with Barclays, and it is likely that three of these interested parties will be selected. The first opportunity is being offered to Temasek and CDB.
Barclays is the last of the big British banks to raise capital. The Royal Bank of Scotland (RBS) has already raised £12 billion and HBOS, which was formed out of the merger between Halifax and Bank of Scotland, will this week publish its rights issue document to raise £4 billion, said the paper.
Unlike RBS, Barclays does not require this capital to shore up its balance sheet. However, it wants to raise its core tier 1 capital ratio above 5.25 per cent, from around 5.1 per cent now, which is among the lowest for European banks, said the paper.
This article was first published in The Straits Times on Jun 16, 2008
