Barclays May Announce Capital Raise Next Week, WSJ Says

Barclays Plc, whose Chief Executive Officer Antony Jenkins has been seeking to fend off regulators’ calls to increase capital, will probably announce plans next week to raise billions of dollars, the Wall Street Journal reported.

The bank may sell convertible bonds and common stock to boost its capital ratios, the newspaper said today, citing people familiar with the matter without identifying them. Mark Lane, a spokesman for the London-based lender, declined to comment. Barclays is scheduled to report quarterly earnings on July 30.

Barclays, which holds the least capital as a proportion of its assets of Britain’s four biggest banks, has been pressed by regulators to boost that ratio to 3 percent. Jenkins, 52, who took up the job 11 months ago, warned that doing so immediately could force the bank to cut lending, while analysts estimated the bank could have to sell as much as 6 billion pounds ($9.2 billion) of stock. Barclays is in talks with regulators to delay the move until the end of 2014, according to the Financial Times.

Barclays is also in discussions with U.K. regulators about the size of the capital raise, according to the Journal. The plans are preliminary and may change, the newspaper said.

The 3 percent target, which seeks to limit the risks to the taxpayer in a repeat of the financial crisis, would force banks to hold 3 pounds of equity for every 100 pounds of assets. Both Barclays and Nationwide Building Society, the U.K.’s largest customer-owned lender, fell short of the goal at 2.5 percent and 2 percent respectively. The Prudential Regulation Authority gave Nationwide until 2015 to comply, allowing the mutual to avoid issuing capital that could have forced its member-owners to cede control.

When Jenkins suggested on June 28 that bringing forward the leverage ratio target may choke off lending, the Bank of England responded on the same day that capital plans that restrict credit to the economy “will not be accepted.”

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