Barclays (BARC.L) confirmed it will set out how it plans to meet tougher UK rules on capital on Tuesday, responding to media reports it is considering selling new shares.
Barclays said on Monday it had been in talks with Britain’s financial regulator and would update the market alongside its half-year results.
The bank is expected either to sell bonds that are wiped out if it hits trouble, known as CoCos, or to raise equity or a combination of both.
Shares in Barclays fell by over 3 percent on Monday, the biggest fallers on the FTSE 100 .FTSE index of blue-chip stocks, following reports in British newspapers that the bank’s advisers had sounded out existing investors about offering them new shares to raise 4 billion pounds ($6.2 billion).
Sources familiar with the matter said last week that was an option, but not the preferred one. Chief Executive Antony Jenkins is still in talks with regulators about how to hit the target, so plans could change at short notice.
Barclays declined to comment.
The bank needs about 7 billion pounds to lift its leverage ratio to a 3 percent minimum demanded by the Bank of England from an estimated 2.5 percent, to protect the bank against future losses on bad loans and mis-selling compensation.
Investec analyst Ian Gordon said he didn’t believe Barclays needed fresh equity and that such a move would result in a drag on the bank’s return on equity, an important performance measure.
But Numis analyst Mike Trippitt said an equity fundraising would have less impact on the bank’s return on equity than issuing CoCos, on which potentially high coupons would need to be paid.
($1 = 0.6506 British pounds)
REUTERS
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