BARCLAYS Plc, the United Kingdom's fourth-biggest bank by market value, may sell shares to replenish capital depleted by asset writedowns, sources said.
The fund-raising would bolster the London-based company's so-called Tier 1 capital ratio, which trails Edinburgh-based HBOS Plc and Royal Bank of Scotland Group Plc. Barclays needs at least 7 billion pounds (US$13.8 billion) to strengthen its balance sheet as asset markdowns increase, according to estimates from analysts at Lehman Brothers Holdings Inc and Citigroup Inc.
"Many people are surprised they haven't pushed the button by now," said Robert Talbut, chief investment officer at Royal London Asset Management, which owns Barclays stock.
Chief Executive Officer John Varley said as recently as May 12 the company may have to raise capital, Bloomberg News reported. Since then, Barclays shares have declined 25 percent, almost twice as much as the eight-member FTSE All-Share Banks Index. Barclays fell 2.4 percent to 329.5 pence at 11:20am in London trading yesterday, valuing the bank at about 22 billion pounds.
Securities firms and banks have sought almost US$285 billion from outside investors as asset writedowns and investment losses caused by the collapse of the subprime mortgage market climbed to US$390 billion during the past year.
Lehman Brothers, the fourth-biggest US securities firm, is seeking as much as US$5 billion as losses mount.
Barclays is in talks with sovereign wealth funds to gain more than 3 billion pounds of funding, the London-based Sunday Telegraph reported.
The company sold shares to Singapore's Temasek Holdings Pte and China Development Bank last year to help finance the acquisition of Amsterdam-based ABN Amro Holding NV. Temasek holds 2.06 percent and China Development owns 3.02 percent of Barclays.