Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Barclays Plans Contingent Bonds as U.K. Pushes Banks on Capital

The Barclays Plc logo hangs from the top of the company's headquarters in London. Photographer: Simon Dawson/Bloomberg
The Barclays Plc logo hangs from the top of the company's headquarters in London. Photographer: Simon Dawson/Bloomberg

Nov. 5 (Bloomberg) -- Barclays Plc plans to sell contingent bonds in the first deal by a U.K. bank since regulators told lenders to bolster capital buffers in September.

Barclays, which in June was fined for rigging interest rates in the latest of a series of regulatory missteps, is planning investor presentations on a potential deal, according to a person familiar with the matter, who asked not to be named because they’re not authorized to speak. Contingent bonds can convert to equity when capital ratios fall to a preset level, or alternatively may be written off.

While U.K. banks have cut business in the nations hardest hit by the euro region’s financial crisis, their exposure still amounts to an average of about 70 percent of core Tier 1 capital, according to the Bank of England’s Financial Policy Committee. At its September meeting, the FPC said banks should seek to retain earnings and raise outside capital “with the options including debt conversion and the issuance of suitable contingent capital instruments.”

“It sounds like they’ve reached agreement over how it would be viewed as regulatory capital and the FPC sounds quite keen on U.K. banks issuing it,” said Simon Adamson, an analyst at CreditSights Inc. in London. “It would be an alternative to issuing share capital. I wouldn’t be surprised if they combined it with a tender offer for some of their existing capital securities.”

Jon Laycock, a spokesman for Barclays in London, declined to comment.

The bank is holding presentations from tomorrow in the U.S., Europe and Asia, according to the person. The transaction is being managed by Barclays, helped by Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG and Morgan Stanley, the person said.

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net; Leo Laikola at llaikola@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.