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Barclays close to securing Japanese deal

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by Kay Mitchell

It is believed that Barclays is close to securing a huge bailout from Japan as it looks to Asia to improve its finances.

Barclays is set to receive a 100 billion yen (£473.4 million) capital injection from Sumitomo Mitsui Financial Group (SMFG). This would give Japan’s largest financial group’s a stake in Barclays.

It is expected that the capital injection will be via a private placement of shares that would leave SMFG with 2% or 3% stake in the British lender.

Many banks throughout the world have been hit by the US sub-prime mortgage collapse but Japan’s largest banks have emerged relatively unhurt.

It is understood that Japanese banks are set to become silent investment partners of any large western banks that need help. Japan’s banks are faced with a dwindling market so are looking at opportunities overseas.

The deal follows speculation earlier this week that Barclays confirmed it was close to raising £4 billion in a placing with some of the world’s largest sovereign wealth funds.

Barclays was hit by £2.5 billion in losses stemming from the US sub-prime mortgage collapse and the credit squeeze.

Other banks such as Citigroup, Royal Bank of Scotland and UBS are all believed to be planning large capital raisings on the Japanese debt market.

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News posted: June 20, 2008

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