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Barclays confirms regulatory talks over fundraising

Barclays has confirmed speculation that it is looking to raise equity following reports the bank was eyeing a deal to plug its capital shortfall
Barclays confirms regulatory talks over fundraising

Barclays (LON:BARC) has confirmed speculation that it is looking to raise equity following reports the bank was eyeing a deal to plug its capital shortfall.

The Sunday Times claimed investors were approached last week about a potential rights issue to raise around £4bn.

Today, Barclays revealed it was in talks with the Prudential Regulation Authority (PRA) over its “financial and capital management plans” and said any information would accompany its interim results tomorrow (July 30).

It emerged last month that Britain’s lenders needed to raise around £27bn to fill a funding black hole. Barclays’ capital shortfall stood at £3bn at the end of 2012.

It comes alongside reports that the Treasury will hand the Serious Fraud Office (SFO) £2mln to fund its criminal probe into the deal that saw it avoid a government bailout at the height of the financial crisis.

Barclays is under investigation by the SFO and City watchdog the Financial Conduct Authority following allegations it lent Qatar money to help in the rescue of the British bank.

JP Morgan reckons that Barclays remains an attractive investment even after a £4bn capital raise.

“In our view, the ongoing litigation/redress costs are already included within the group's PRA capital adjustments (£8.6bn) and hence are unlikely to change the regulator's capital requirements,” said analyst Raul Sinha.

He incorporates a £1bn provision in his second quarter estimates and sees earnings per share (EPS) dilution of between 3% and 8.5% with an equity issue “at the top end”.

Barclays shares fell 3% to 310p each on Monday.



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