Barclays heads East to boost bank’s coffers
Qatar Investment Authority becomes one of British bank’s significant shareholders.
LONDON – Asian and Middle Eastern investors are to play leading roles in recapitalising British bank Barclays, which announced a share issue Wednesday to raise about 4.5 billion pounds (8.9 billion dollars, 5.7 billion euros).Barclays said the state-run Qatar Investment Authority had agreed to take about a third of the new shares with an investment worth 1.76 billion pounds, with Singapore’s public investment group Temasek also taking part.
The state-run China Development Bank, another Qatari fund called Challenger Universal and Japanese bank Sumitomo Mitsui Banking Corporation (SMBC) will also buy stakes.
“We are pleased to structure our share issue in such a way as to welcome Qatar Investment Authority … and Sumitomo Mitsui Banking Corporation as significant new shareholders in Barclays and also to give existing shareholders the ability to participate,” he added.
Barclays is the latest in a long line of international banking groups to raise new capital by issuing shares in a bid to strengthen finances that have been battered by losses caused by the subprime loan crisis.
Cash-rich Middle Eastern and Asian investors have played an important role in some of these recapitalisations, in the United States and in Switzerland.
“Through our capital raising today we strengthen our capital base and give ourselves additional resources to pursue our strategy of growth through earnings diversification,” chief executive John Varley said in a statement to the London Stock Exchange.
Barclays said it planned to raise “approximately 4.5 billion pounds” through the issue of 1.576 billion new shares.
Challenger Universal – led by the chairman of Qatar Holding, Sheikh Hamad Bin Jassim Bin Jabr Al-Thani – has agreed to purchase shares worth 533 million pounds.
SMBC has agreed to invest approximately 500 million pounds, Temasek up to 200 million pounds and the China Development Bank up to 136 million pounds.
Barclays added that following the purchases, China Development Bank and Temasek would remain among the British bank’s largest shareholders.
“A number of leading institutional shareholders and other investors have also agreed to invest up to” 1.34 billion pounds, the statement also said.
Some 4.0 billion pounds was being raised by placing 1.41 billion shares at 282 pence each, a discount of 9.3 percent to Barclays’ closing price on June 24.
A further 500 million pounds — the entire investment of SMBC — was being raised by placing 169 million shares at 296 pence each.
Many major banks have suffered massive losses owing to their exposure to securities that were linked to high-risk American home loans, known as subprime mortgages.
Barclays is the fourth British bank to raise funds from investors in the past two months after suffering losses related to the credit crunch.
HBOS is to ask shareholders to approve plans for a rights issue totalling 7.9 billion dollars (5.0 billion euros) later this month. Royal Bank of Scotland has raised 12 billion pounds with its own issue.
Bradord & Bingley is seeking investment worth 400 million pounds.