Barclays looks for £6.5bn in Middle East

Barclays is hoping to stun the City today by unveiling a £6.5bn fundraising that will bolster its balance sheet without leaning upon the taxpayer for support.

Barclays is hoping to stun the City today by unveiling a £6.5bn fundraising that will bolster its balance sheet without leaning upon the taxpayer for support.

Final negotiations were under way last night with investors in the Middle East to try to secure the cash injection that will allow Barclays to differentiate itself from Royal Bank of Scotland, Lloyds TSB and HBOS which have all been forced to agree to a £37bn government bailout.

Barclays was last night aiming to complete negotiations with investors in Qatar and Abu Dhabi about investing in the bank which is trying to battle through the financial crisis by buying up the Wall Street operations of the collapsed Lehman Brothers investment bank.

Being able to shun taxpayer funds will allow Barclays to avoid the restrictions both on directors' bonuses the other banks have agreed to and on paying dividends to existing shareholders.

Roger Jenkins, a colleague of Barclays executive Bob Diamond, is believed to have led the negotiations to find backers prepared to put more cash into the bank.

Barclays has been forced to raise more capital as part of the bailout scheme which seven banks and one building society have signed up to in the government's attempt to shore up confidence in the banking system.

But unlike RBS, Lloyds and HBOS it assured government ministers that it could raise the necessary funds without the backing of the taxpayer.

Chief executive John Varley convinced government officials and the Financial Services Authority, that it had one backer prepared to stump up £1bn. It had agreed to raise £3bn in preference shares by the end of the year and a further £3.5bn of ordinary shares soon after its financial results were published in February or March next year.

However, Barclays is now hoping to raise the full amount, or close to it, more quickly by convincing Qatar Investment Authority and an Abu Dhabi-based sovereign wealth fund to support the business proposition. It may manage to avoid issuing preference shares by issuing more complex financial instruments. The Qataris are already on Barclays shareholder register. The organisation backed its £4bn fundraising this year at a price of 282p a share.

Contributor

Jill Treanor

The GuardianTramp

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