Barclays' entire board will stand for re-election next year to let shareholders pass judgement on a controversial £7bn capital raising that would dilute existing investors and leave Middle East funds owning almost a third of the bank.
The bank has faced shareholder fury over the plan, which is designed to meet the Government's stricter capital requirements without letting the state dictate the bank's strategy.
Barclays was said to have made the move as a matter of principle, but investors also claimed they had wrung the concession from the bank. Directors usually serve three-year terms and are re-elected on a rolling basis at the spring annual meeting.
The decision came after a leading investor group recommended voting against the plan. Pensions & Investment Research Consultants (Pirc) made its recommendation because the sale of £5.8bn of shares to funds linked to the rulers of Qatar and Abu Dhabi would be too dilutive of ordinary shareholders. Pirc is also concerned about the potential for the shareholders to exert undue influence on Barclays' direction.
Unlike Royal Bank of Scotland, Lloyds TSB and HBOS, Barclays turned down the offer of a UK state capital injection, arguing that the Treasury's conditions would tie its hands on strategy, dividends and executive pay.
Barclays is holding a shareholder meeting on 24 November to approve the sale of new securities to Qatar Holding; Challenger Universal, an investment vehicle set up by Qatar; and Sheikh Mansour Bin Zayed Al Nahyan of Abu Dhabi.
Britain's third biggest bank by assets is selling £3bn of reserve capital instruments to Qatar and Abu Dhabi, paying 14 per cent interest, and £2.8bn of bonds paying 9.75 per cent before converting into shares in the first half of next year. Existing shareholders had the chance to buy £1.5bn of convertible bonds paying 9.5 per cent, but only took up £1.25bn.
The sale has angered Barclays' shareholders because their holdings will be massively diluted and they are not being offered such favourable terms.
Pirc said: "If the proposal falls, then Barclays will have to seek other means of raising capital, which could include returning to the Government for assistance. However, Pirc considers that the possibility of this resolution failing should have been taken into consideration by Barclays when it decided to put forward this proposal."
Pirc's clients, with about £1.5 trillion of assets under management, include some of Britain's biggest public pension funds and institutional investors.Reuse content