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Barclays set to launch Rights Issue

Barclays set to launch Rights Issue

Category: Banking

Updated: 30/07/2013
First Published: 30/07/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Barclays Bank has announced it intends to raise £5.8 million by way of a Rights Issue to fill a shortfall in capital.

Under the Rights Issue, the bank will issue £2 billion worth of bonds to existing investors which can be turned into shares.

The announcement follows a review by the Prudential Regulation Authority (PRA) in June 2013 into the 'capital adequacy' of banks and building societies across the UK.

During the review, the PRA put forward a Leverage Ratio, defined as a measure of an institution's financial health, which found the bank's amount of capital relative to its gross lending was 2.2%.

The PRA's target stands at 3%, however, indicating that Barclays possessed a capital shortfall of £12.8 billion.

The Rights Issue will take effect in September this year, subject to final approvals being made.

In a statement, the chairman of Barclays Bank, Sir David Walker, said: "After careful consideration of the options to meet the PRA request for a 3% leverage ratio by June 2014, the Board has decided on a set of actions, including the rights issue, to meet this target, whilst continuing to deliver our strategy under the Transform programme."

"The Board expects that Barclays will continue to reduce leverage further, whilst maintaining target capital levels, and will aim to do so in a way that achieves sustainable returns above the cost of equity," he added.

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