Barclays fights FCA over Qatar fundraising

Bank will issue £5.8bn in shares to plug a £12.8bn capital shortfall

Barclays is steeling itself for imminent developments from the financial regulator over its controversial fundraising from sovereign wealth funds at the height of the financial crisis in 2008.

The news emerged as Barclays detailed plans for a bigger-than-expected £5.8bn rights issue to satisfy the new banking regulator, which has identified that Britain's second-biggest bank needs an extra £12.8bn of capital.

Barclays said that it expects further developments in the inquiry into its 2008 fund raising from Qatar which is being investigated by both the Serious Fraud Office (SFO) and Financial Conduct Authority (FCA).

It said it had received the FCA's preliminary findings at the end of June and had sent back its response "contesting" those findings last week. It added: "Barclays expects further developments in the near term."

The investigation, which centres on four individuals, including the outgoing finance director Chris Lucas, and the bank itself, is looking at whether Barclays lent money to the Qataris to buy shares during the £4.5bn fund raising from sovereign wealth funds.

Earlier this week the SFO was given an extra £2m by the Treasury to speed up its investigation.

Barclays shares fell 17.5p, or 5.7 per cent, to 291.3p yesterday, having fallen 3.5 per cent on Monday when the talk was that the rights issue would be closer to £4bn than £6bn.

The right issue, which will be launched in September, will involve existing shareholders being offered one new share for every four they own at 185p a share – a 40 per cent discount to Monday's closing price but still well below the theoretical ex-rights price of 270p.

Barclays will collect £5.8bn after expenses through the massive issue of new shares as part of its plan to plug the £12.8bn shortfall identified by the Prudential Regulation Authority (PRA). The bank also took another £2bn hit for mis-selling payment protection insurance and interest rate swaps, taking the total set aside for mis-selling to £5.5bn.

But in a sweetener to investors, Barclays said that once it had closed the capital gap, it would be able to increase its dividend payouts by more than expected from 2014. The chief executive, Antony Jenkins, who took over after Bob Diamond quit in the wake of the Libor-rigging scandal last year, said: "After careful consideration of the options, the board and I have determined that Barclays should respond quickly and decisively to meet this new target. We have developed a bold but balanced plan to do so."

Barclays' first-half profits fell 17 per cent to £3.59bn, which was slightly below City estimates and included a £640m charge for Mr Jenkins' restructuring plan, which aims to save £1.5bn in annual costs and will see a total of 3,700 jobs go by 2015.

The PRA and Bank of England said they welcomed Barclays' move, calling it "a credible plan to meet a leverage ratio of 3 per cent, after adjustments, by June 2014 without cutting back on lending to the real economy."

Barclays will sell up to an extra £80bn of assets, raise another £2bn through the issue of "CoCos", loss-absorbing securities, and retain more of its earnings in order to meet the £12.8bn target.

Mr Jenkins said: "The board and I are aware of the implications of a rights issue for shareholders. We hope to balance this with reduced uncertainty in the outlook for Barclays and with enhancement of our dividend payout from 2014."

He added that once the new capital was in place, Barclays could increase the amount of earnings it pays in dividends to shareholders – from his original target of 30 per cent to somewhere between 40 per cent and 50 per cent.

Barclays is paying about £150m in fees for the rights issue, much of which will go to the lead underwriters and bookrunners: Credit Suisse, Deutsche Bank, Bank of America Merrill Lynch and Citi.

The overall underwriting fee is back down to 1.7 per cent, which is half the level such fees rose to during the peak of the financial crisis between 2007 and 2009.

PROMOTED VIDEO
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
News
peopleAt least it's for a worthwhile cause
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments