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Wed 22 Apr 2009 11:29 PM

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Qatar reduces stake in Barclays

Qatar sovereign wealth fund confirms sale but remains a committed long-term shareholder and partner.

Qatar reduces stake in Barclays
REDUCING STAKE: Qatar Holding reduces stake in British bank, but remains a committed long-term shareholder. (Getty Images)

Qatar Holding - the investment arm of the Qatar government - said on Wednesday it had sold 35 million shares in Barclays PLC, reducing its stake in the UK bank to 5.82 percent or 487.8 million shares.It said the sale was part of a volatility-driven portfolio management strategy applying to a small portion of its aggregate holding, rather than a demonstration of falling confidence in the bank.

"We remain a supportive long term shareholder in Barclays and a key commercial partner of Barclays," Qatar Holding said in a statement.

At Wednesday's closing price of 218p, the sale was worth £76 million. Barclays declined to comment.

The sovereign wealth fund is one of the two Middle Eastern investors that the bank turned to last October as part of a £7.3 billion capital raising exercise through an institutional placement.

Barclays, unlike its competitors, Royal Bank of Scotland and HBOS (now part of Lloyds Group) was not forced to go to the UK government for additional funding to boost its capital base.

Instead, it opted to raise capital from private investors in the form of £3 billion in reserve capital instruments, classified as debt, and £4 billion in mandatory convertible notes that are due to be converted to shares on or before June 30 at 153.3p.

In addition, the investors subscribed for £3 billion in warrants that can be exercised at 197.8p a share. If these are exercised in full, Middle East investors will own nearly 32 percent of Barclays.

Qatar said its shareholding in Barclays would increase by 326.2 million shares upon conversion of its holding of the bank's mandatory convertible notes.

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