Indeks
Barclays Plc, Britain's second-biggest bank, will raise 7.3 billion pounds ($11.8 billion) by selling securities to investors including funds in Abu Dhabi and Qatar to restore capital without tapping the U.K.'s bailout plan.
Barclays will sell 5.8 billion pounds of convertible notes and preferred shares paying as much as 14 percent annual interest to the Mideast investors, the London-based company said in a statement. The bank also plans to sell as much as 1.5 billion pounds of securities today to new and existing shareholders.
Chief Executive Officer John Varley has until the end of the year to meet new capital requirements set this month by the U.K. to prevent credit writedowns, a loss of confidence and a recession from destroying the country's banks. While Barclays will avoid the government's restrictions on dividend payouts and executives bonuses, the bank's second sale of securities this year will dilute the holdings of most investors.
``The good news is they have managed to raise the money and have avoided going cap in hand to the government or pursuing a heavily discounted rights issue,'' said Alan Beaney, head of investments at Principal Investment Management in Leeds, England who manages $2 billion including Barclays' shares. ``On the other hand, instead of being diluted by the U.K. government, shareholders are being diluted by sovereign wealth funds.''
Barclays was down 6.4 percent at 192 pence at 9:50 a.m., valuing the bank at 16 billion pounds and extending this year's decline to 61 percent.
`Slightly Ahead'
Varley said profit in the first nine months exceeded year-ago figures, helped by the acquisition last month of Lehman Brothers Holdings Inc.'s U.S. securities unit.
Pretax profit for the nine months ended Sept. 30 was ``slightly ahead'' of 2007, Barclays said in a separate statement today. Costs rose in line with revenue, and profit in its global retail and commercial banking unit was ahead of 2007.
Barclays took 1.2 billion pounds of new credit markdowns, adding to 2.8 billion pounds in the first half, it said today. The latest markdowns were offset by 1.1 billion pounds in ``fair valuation'' gains on issued notes, Barclays said.
Bad loans rose at a faster pace than the first half, and capital market volumes in October were lower than September, the company said.
Barclays will sell as much as 4.3 billion pounds of convertible stock paying an interest rate of 9.75 percent until June 30 next year, when the securities will convert to common stock. Qatar Holding, Challenger Universal Limited, an investment vehicle set up by the Qatar Government, and Sheikh Mansour Bin Zayed Al Nahyan, a member of the Royal Family of Abu Dhabi, will invest a total of 2.8 billion pounds in the convertible stock. The investors will buy new Barclays shares at 153.276 pence apiece in the deal.
New Investors
Barclays current and new institutional investors will also invest as much as 1.5 billion pounds of convertible stock on the same terms in a placing that closes today. Qatar will invest 500 million pounds in convertible stock and 1.5 billion pounds in the preferred stock as well as being given the option of investing as much as 1.5 billion pounds in warrants with an exercise price of 197.775 pence. Abu Dhabi will invest 2 billion pounds in convertible stock and 1.5 billion pounds in the preferred stock.
Barclays interest rate on its preferred stock is tax deductible will effectively pay 10 percent.
U.K. banks must lift reserves to meet new government requirements. Barclays said it expects the share sales to lift its Tier 1 capital ratio to more than 11 percent from 7.9 percent as of June 30.
Edinburgh-based Royal Bank of Scotland Group Plc plans to raise 20 billion pounds in a share sale underwritten by the U.K. The deal will give the government as much as 60 percent ownership unless investors buy shares, restrict management pay and dividend payouts, and led to the ouster of CEO Fred Goodwin.
Credit Crisis
Lloyds TSB Group Plc, which agreed to buy U.K. mortgage lender HBOS Plc in a government backed deal, may raise as much as 17 billion from the government.
Banks worldwide have raised $692 billion in capital since the global credit crisis began 13 months ago, sending stock markets plunging. The contraction in credit markets led to the failure of New York-based Lehman Brothers and Washington Mutual Inc.
Barclays, which bought Lehman's North American unit for $1.75 billion after the New York-based securities firm filed for bankruptcy on Sept. 15, is pulling back plans to grow its consumer-banking operations in emerging markets to help preserve cash amid the global economic downturn.
UBS AG analysts lowered the bank's stock last week to ``neutral'' from ``buy'' and said its earnings may fall by 25 percent next year as the U.K. economy deteriorates and customer defaults rise.
Barclays will sell 5.8 billion pounds of convertible notes and preferred shares paying as much as 14 percent annual interest to the Mideast investors, the London-based company said in a statement. The bank also plans to sell as much as 1.5 billion pounds of securities today to new and existing shareholders.
Chief Executive Officer John Varley has until the end of the year to meet new capital requirements set this month by the U.K. to prevent credit writedowns, a loss of confidence and a recession from destroying the country's banks. While Barclays will avoid the government's restrictions on dividend payouts and executives bonuses, the bank's second sale of securities this year will dilute the holdings of most investors.
``The good news is they have managed to raise the money and have avoided going cap in hand to the government or pursuing a heavily discounted rights issue,'' said Alan Beaney, head of investments at Principal Investment Management in Leeds, England who manages $2 billion including Barclays' shares. ``On the other hand, instead of being diluted by the U.K. government, shareholders are being diluted by sovereign wealth funds.''
Barclays was down 6.4 percent at 192 pence at 9:50 a.m., valuing the bank at 16 billion pounds and extending this year's decline to 61 percent.
`Slightly Ahead'
Varley said profit in the first nine months exceeded year-ago figures, helped by the acquisition last month of Lehman Brothers Holdings Inc.'s U.S. securities unit.
Pretax profit for the nine months ended Sept. 30 was ``slightly ahead'' of 2007, Barclays said in a separate statement today. Costs rose in line with revenue, and profit in its global retail and commercial banking unit was ahead of 2007.
Barclays took 1.2 billion pounds of new credit markdowns, adding to 2.8 billion pounds in the first half, it said today. The latest markdowns were offset by 1.1 billion pounds in ``fair valuation'' gains on issued notes, Barclays said.
Bad loans rose at a faster pace than the first half, and capital market volumes in October were lower than September, the company said.
Barclays will sell as much as 4.3 billion pounds of convertible stock paying an interest rate of 9.75 percent until June 30 next year, when the securities will convert to common stock. Qatar Holding, Challenger Universal Limited, an investment vehicle set up by the Qatar Government, and Sheikh Mansour Bin Zayed Al Nahyan, a member of the Royal Family of Abu Dhabi, will invest a total of 2.8 billion pounds in the convertible stock. The investors will buy new Barclays shares at 153.276 pence apiece in the deal.
New Investors
Barclays current and new institutional investors will also invest as much as 1.5 billion pounds of convertible stock on the same terms in a placing that closes today. Qatar will invest 500 million pounds in convertible stock and 1.5 billion pounds in the preferred stock as well as being given the option of investing as much as 1.5 billion pounds in warrants with an exercise price of 197.775 pence. Abu Dhabi will invest 2 billion pounds in convertible stock and 1.5 billion pounds in the preferred stock.
Barclays interest rate on its preferred stock is tax deductible will effectively pay 10 percent.
U.K. banks must lift reserves to meet new government requirements. Barclays said it expects the share sales to lift its Tier 1 capital ratio to more than 11 percent from 7.9 percent as of June 30.
Edinburgh-based Royal Bank of Scotland Group Plc plans to raise 20 billion pounds in a share sale underwritten by the U.K. The deal will give the government as much as 60 percent ownership unless investors buy shares, restrict management pay and dividend payouts, and led to the ouster of CEO Fred Goodwin.
Credit Crisis
Lloyds TSB Group Plc, which agreed to buy U.K. mortgage lender HBOS Plc in a government backed deal, may raise as much as 17 billion from the government.
Banks worldwide have raised $692 billion in capital since the global credit crisis began 13 months ago, sending stock markets plunging. The contraction in credit markets led to the failure of New York-based Lehman Brothers and Washington Mutual Inc.
Barclays, which bought Lehman's North American unit for $1.75 billion after the New York-based securities firm filed for bankruptcy on Sept. 15, is pulling back plans to grow its consumer-banking operations in emerging markets to help preserve cash amid the global economic downturn.
UBS AG analysts lowered the bank's stock last week to ``neutral'' from ``buy'' and said its earnings may fall by 25 percent next year as the U.K. economy deteriorates and customer defaults rise.
