Barclays clause could mean Middle East have majority control

It has been revealed that Barclays could see its Middle East investors gain majority control of the bank as a result of a clause in the terms of the deal.

In October, Barclays rejected the Government’s bailout package and announced that it was raising £5.3 billion from investors in Qatar and Abu Dhabi, who took a combined stake in the bank of over 30%.

However, it has emerged that the small print in last autumn’s deal means the investors could see their stake in Barclays increase at no extra cost if it raises new funds at the current share price.

This week, shares in Barclays have taken a pounding. At one point on Wednesday, the stock was down 33% to 48p - the lowest level since 1985. Stock has fallen for seven consecutive days, losing over 60% of its value in just a week.

The UK banking sector, as a whole, has suffered this week as the Government‘s second bailout package failed to bring relief to the ailing sector.

Shares in Barclays are currently at the 66.1p mark and the bank would have to increase the number of shares issued to its Middle East investors if it raises new capital before 30 June.

Should Barclays seek to raise capital, this would mean the investors would have approximately 55% of Barclays, in effect, handing control over to them.

It is believed that the Financial Services Authority is investigating the implications of the clause.

Reports say that Barclays has been reassuring investors that it has sufficient capital but the Government has stated that it will not allow any more banks to collapse.

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