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Barclays yesterday sought to head off a shareholder backlash against plans to sell almost a third of the bank to middle eastern investors.
The bank said it planned to meet shareholders to allay fears that the sale of new shares to the Qatar Investment Authority and Sheikh Mansour bin Zayed al Nahyan was expensive. It is understood the bank will also seek to amend the terms of the deal.
Barclays has come under pressure to explain its fundraising since it emerged that the bank is paying a high price to avoid participating in the government's £37bn bail-out of the banking industry.
Barclays is paying a higher interest rate on the loan to its Middle Eastern investors than Lloyds TSB will pay to the Treasury. The conditions attached to the government's bank bail-out, also appear much weaker than first thought.
Analysts said it was unclear if Barclays' strategy was in the interests of shareholders. They said government aid at a 12% interest rate looked cheap compared to the 14% demanded by the Qataris, especially as the Treasury was prepared to be flexible on rescued banks paying dividends.
Several investors are concerned Barclays rushed a private deal to secure funds to avoid government restrictions on its commercial activities, when ministers were prepared to compromise.
Aviva Investors and Legal & General Investment Management, which owns 5% of the bank, were reported to be prepared to vote against the deal if the bank was unable to offer improved terms at the extraordinary meeting on November 24.
One top-10 investor in the bank said shareholders also had concerns about the scale of dilution, the costs and the absence of pre-emption rights under Barclays' fundraising plans.
Barclays has told investors the benefits of remaining independent outweigh the cheaper state funds. Barclays president Bob Diamond, favours international expansion, which the government has banned if banks accept Treasury funds.
A spokesman for Barclays said: "We have announced a large capital-raising plan. We are meeting with our leading shareholders, as you would expect, in advance of them voting on the capital-raising at our forthcoming general meeting. Our shareholder conversations are constructive and ongoing."
The bank is expected to meet the Association of British Insurers on Friday to discuss the issue. The ABI, which represents a fifth of all British investors, said it was up to individual shareholders to decide whether to support the plan.
Barclays plans to raise £7bn with £3bn in reserve capital instruments from the QIA and Sheikh Mansour. The middle eastern investors will pay a further £2.8bn for convertible shares. The bank's existing institutional investors were offered £1.25bn in convertible shares.
Barclays shares finished the day down 6% at 168.2p.
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