Barclays set to raise £4.5bn in share sale

Today's deal is likely to see the Qatari sovereign wealth fund and the country's prime minister become the bank's biggest shareholders with a combined stake of up to 10%.

Existing investors China Development Bank and Singapore's Temasek will buy enough new shares to keep their holdings at 3% and 2% respectively, while a new investor, Sumitomo Mitsui Banking Corporation of Japan, will end up with a 2% stake.

Barclays shares jumped 13¼p to 324p today.

Chief executive John Varley said: "We have been working on this structure for a long time and it gives us speed, certainty of execution and certainty of price."

While arch-rival Royal Bank of Scotland got its £12 billion rights issue away earlier this month, HBOS's £4 billion rights issue is still hovering on the brink of disaster, and Bradford & Bingley has been forced to slash the price of its share offering. All three banks had to offer their rights issues at a 40-plus discount to their then share prices.

By contrast, Barclays is selling its shares at a minimal discount. Sumitomo is paying 296p for its £500 million worth of shares in what is a firm placing. That is a 4.7% discount to last night's closing price.

The rest of the placing, which includes a clawback to allow existing shareholders to buy new shares on the basis of three for every 14 they own, has been priced at 282p, which is a 9.3% discount to last night's price.

Varley said the new money would not only shore up the bank's balance sheet to give it capital ratios ahead of its long-standing targets, but also give it cash to tackle growth opportunities.

He said the bank's equity tier one ratio, which stood at 5.1% at the end of last year, would move up to 6.3% following the share placing.

In terms of growth he is particularly keen on expanding banking in Russia and Pakistan and investment banking opportunities in the US and Asia.

Bob Diamond, president of Barclays, said it was important the new investors were long-term clients of Barclays.

"We have known the Qataris for many years and started serious talks with Sumitomo more than a year ago," he said."

Varley also fleshed out last week's trading statement calling the performance during May one of "resilience." He said investment banking profits were flat compared with a very strong performance in May 2007, while retail and commercial banking was ahead.

The bank also committed itself to paying an unchanged interim dividend of 11.5p which will be paid on the new as well as existing shares.

With a dig at his rivals who have all scrapped any idea of paying their next dividend in cash, he said: "We got a pretty strong message that shareholders don't want to receive scrip dividends."