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Barclays to seek £10bn as it snubs taxpayer bailout
13.10.08
Barclays today spurned the Government's bailout which saw three of its rivals take £37 billion of taxpayers' money and said it would raise £10 billion from its own shareholders and resources.
The news came as a huge surprise to the stock market, which had thought Barclays was one of the banks going cap in hand to the Government. The shares jumped 22¾p to 230¼p.
Chief executive John Varley said: “We do not intend or expect to use the Government funding. This is a private-sector solution to the problem. I hope it is the case that the Government appreciates there are those who run their affairs in such a way that they do not need to call on the taxpayer.”
He said the Financial Services Authority and Treasury had agreed Barclays' current capital and fund-raising plans.
Barclays said it would raise £3 billion through issuing new preference shares by the end of the year. That achieves its share of the £25 billion of new tier one capital which the Government ordered eight banks to raise last week.
It plans to raise a further £3 billion through an issue of new ordinary shares after its full-year results are published early next year.
The bank is raising £600 million from sovereign wealth funds for its purchase of the American operations of investment bank Lehman Brothers.
Barclays said it would save £2 billion by scrapping this year's final dividend, and would save another £1.5 billion through “balance-sheet management and operational efficiencies”.
Barclays said one shareholder, believed to be the Qatari royal family, would support the two new share issues with £1 billion. It would also take advantage of the special liquidity scheme and other measures to unfreeze the wholesale money markets and get banks' lending to each other moving.
He also surprised the stock market by saying Barclays' September profit “very significantly exceeded the monthly run rate for the first half of the year, with strong contributions from retail and commercial banking and from investment banking and investment management”.
Varley was far more bullish than at the time of the Lehman acquisition last month when he said July and August had seen the bank trade satisfactorily.
Reader views (2)
Here's a sample of the latest views published.
Good for you Barclays. I have considerable savings in 2 of the banks that have stolen our tax money so I will be shutting my accounts as soon as Barclays will accept me as a new account opener.
- Sean, London
Barclays is the new JP Morgan of the UK and possibly Europe. Well done the Varley, well done Bob Diamond.
- James, New Malden, Surrey
