By Steve Slater
UK's second largest bank to raise $12.1bn from Gulf investors in rescue deal.
British bank Barclays Plc is to raise 7.3 billion pounds ($12.1 billion) from investors from Qatar and Abu Dhabi and others to allow it to avoid taking government rescue cash, it said on Friday.
Britain's second biggest bank said it is raising up to 3.5 billion pounds from Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family. That could give him a 16.3 percent stake in the bank.
It is raising up to 2 billion pounds from Qatar Holding and 300 million from Challenger, an investment vehicle of a member of Qatar's royal family.
That could leave Qatar Holding with a 12.7 percent stake and Challenger with 2.8 percent.
Barclays shares initially jumped after the news as investors welcomed the bank's ability to raise cash in tough markets and an adequate trading update, but later eased back. At 1.30pm Dubai time they were unchanged at just over 205 pence after touching 228p.
The bank said group profit in the first nine months of this year was "slightly ahead" of the same level a year earlier.
It took a net writedown of 129 million pounds from credit market writedowns for the third quarter, but said 1 billion pounds of gains on debt it carries were reversed in October.
Barclays' investor base has been transformed in the past two years, as it has raised funds from investors in China, Singapore and Japan as well as the Middle East and the bank expects to benefit commercially from the links as well as getting cash.
"There has been a significant shift in the availability of capital and economic power in the world over the last five years and we're ensuring we're aligned with those changes," said John Varley, Barclays chief executive.
The bank is seeking to raise up to a further 1.5 billion pounds from the sale of MCNs (mandatorily convertible notes) with existing and other investors.
Asked on a conference call whether Barclays has enough capital to avoid more fundraising, Varley said: "Yes, we have what we need."
Barclays earlier this month turned down an offer of government funds under Britain's 400 billion bailout package and said it would raise capital privately.
Rivals Royal Bank of Scotland, Lloyds TSB and HBOS have agreed to take up to 37 billion pounds of taxpayers' funds to help rebuild balance sheets hit by the credit crisis and prepare for possible recession.
Barclays said when the government's recapitalisation plan was announced that it planned to raise about 6.5 billion pounds, with 3 billion from the sale of preference shares and the rest from selling ordinary shares. It had until the end of March to raise funds.
Those sales were expected to increase the bank's core tier 1 capital ratio to about 8 percent, analysts estimated, up from 6.3 percent after a 4.5 billion pounds fundraising in July. It will lift its overall tier 1 ratio to above 11 percent from July's 9.1 percent.
Barclays has lost billions of pounds from credit-related asset writedowns and is faced with a sharply slowing UK housing market and economy, but it has fared better than many rivals.
It has raised funds from investors in China, Singapore and Japan as well as Qatar.
The bank expects to gain a competitive advantage by raising capital privately, while RBS and others will have the government as a major shareholder. (Reuters)For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.