SHARES in Barclays Plc, the United Kingdom's fourth-biggest bank, rose the most in 16 years in London trading after the company said it may sell stock to strengthen capital.
It also stated that earnings last month were better than a year ago, Bloomberg News reported.
Barclays shares gained as much as 13 percent after the London-based bank said in a statement that the share sale is "under active consideration" and profit last month was "well ahead" of 2007.
Credit writedowns at Barclays were less than those at peers including Royal Bank of Scotland Group Plc, which raised 12.3 billion pounds (US$23.4 billion) in new capital, and HBOS Plc, which is seeking 4 billion pounds in a rights offering.
Barclays also has less dependence on British lending and higher-quality mortgage loans than UK rivals, according to Oriel Securities Ltd.
"Their backs are not against the wall like others," said Mike Trippitt, a London-based analyst at Oriel.
"Looking at the dividend, asset growth and getting in a sovereign wealth fund are all cards they can play before they consider a rights offer," said Trippitt, who has an "add" rating on the stock.
Barclays gained as much as 34 pence, the most since September 1992, and traded up 11 percent to 352 pence at 8:45am yesterday, valuing the bank at 23.1 billion pounds. The shares have fallen 30 percent this year, lagging behind the 21-percent decline in the FTSE 350 Banks Index.
Barclays plans to raise 4 billion pounds within two weeks through a share sale to sovereign wealth funds, the Sunday Times reported. The bank is in talks with at least six potential investors, including China Development Bank and Temasek Holdings Pte, and a deal would include offering new stock to current shareholders underwritten by overseas investors, the newspaper said.
"A further announcement will be made in the event that the board of Barclays decides to pursue such an equity issuance," Barclays said yesterday.
A share sale to sovereign funds may add to Temasek's stake of 2.06 percent and China Development Bank's stake of 3.02 percent.
Analysts including Lehman Brothers Holdings Inc and Citigroup Inc have estimated Barclays needs at least 7 billion pounds to rebuild its capital ratios and counter further asset markdowns.