Barclays close to raising £4 billion

Barclays has confirmed it is close to raising £4 billion in a placing with some largest sovereign wealth funds in the world. The announcement has put an end to doubt surrounding the banking giant.

The placing is expected to be finalised within 2 weeks and will involve issuing new shares to investors at a premium to last Friday’s closing price of 318p. The bank is valued at £20.9 billion.

Last month, the bank revealed that it had written down a further £1 billion in relation to the credit crisis, in the first quarter of the year.

Many banks have been affected badly during the credit crisis and the move is just the latest in a long line of global capital raisings.

The bank’s chairman, Marcus Agius, and his chief executive, John Varley, are expected to come under pressure today to clarify the fundraising in a stock-exchange statement.

Barclays is the last of the big British banks to raise capital. Royal Bank of Scotland (RBS) has already raised £12 billion, while HBOS is to publish its rights issue document this week to raise £4 billion.

Last week, US investment bank Lehman Brothers raised $6 billion (£3 billion) after reporting a $2.8 billion second-quarter loss.

John Varley intends to put the funds raised into expanding the business. Back in April, at the group’s annual meeting, chief executive of Barclays’ global retail and commercial banking division, Frits Seegers, said the group was wide open for new mortgage business as other lenders were reining back as a result of the credit crunch.

Barclays has acquired a licence from the State Bank of Pakistan to open 10 branches and has appointed a series of managing directors to drive growth in India, the Middle East and north Africa, southern Africa, Russia, Pakistan and east and west Africa.

Furthermore, 4 years ago it acquired US credit card issuer Juniper and, as a result, is stepping up its expansion in the US.

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