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Barclays is raising up to £7.3bn from Middle East investors, who could end up owning more than a third of the UK's second largest bank. The move allows the bank to strengthen its balance sheet without taking help from the taxpayer.
The cash injection is coming from the royal families of Abu Dhabi and Qatar, who have both agreed to pump billions into Barclays to bolster its capital ratios. The Qataris, who already own a significant shareholding in Barclays, are providing up to £2.3bn. Once the deal goes through they will own up to 15.5% of the bank.
Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family, will provide up to £5bn and could become Barclays' largest shareholder with a 16.3% stake. The final stakes of both Abu Dhabi and Qatari groups could be less, though, as existing institutional investors will also be invited to take part in the fundraising.
The deal means that Barclays has avoided selling a stake to the UK government - the partial nationalisation option taken by Royal Bank of Scotland, Lloyds TBS and HBOS.
Barclays has been forced to raise more capital as part of the bail-out scheme which seven banks and one building society have signed up to in the government's attempt to shore up confidence in the banking system.
The chief executive, John Varley, said the deal would enables Barclays to meet the capital issuance plan agreed with the UK authorities earlier this month, following the decision by the FSA to increase the capital ratio requirements for all UK banks.
"Today's capital raising provides certainty and speed of execution, and combined with the strong third-quarter performance in a volatile operating environment enables us to continue to implement our strategy and build our business by serving clients and customers around the world," said Varley.
When the UK banking bail-out was being agreed with the Treasury earlier this month, Varley had convinced government officials and the Financial Services Authority, that it had one backer prepared to stump up £1bn. Roger Jenkins, a colleague of Barclays executive Bob Diamond, is believed to have led the negotiations to find backers prepared to put more cash into the bank.
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