Barclays calls for £5.8bn cash to fill shortfall

Barclays calls for £5.8bn cash to fill shortfall.

Earlier today Barclays revealed that it plans to issue £5.8 billion in new shares in an effort to build cash and refill a capital shortfall created by new regulatory demands – a move that will make the bank stronger, Barclays said.

In addition, Barclays will also issue £2 billion of bonds that are turned into shares or wiped out if the bank gets into trouble.

The share sale will be done as a rights issue, which means that existing investors will have the opportunity to buy new shares so their stakes will not be diluted.

Notably, within the same breath, Barclays also admitted that adjusted second quarter pre-tax profit fell 17% to £3.6 billion.

The plans enable the bank to maintain its planned level of lending growth, according to Barclays chief executive Antony Jenkins.

“I am certain the decisive and prompt action we are taking will leave Barclays stronger”, he stated.

The Barclays move comes after the banking regulator, the Prudential Regulation Authority, issued tough new capital requirements aimed at ensuring that banks are protected from the risk of investment losses, even in the event of a fresh financial crisis.

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