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UPBEAT BARCLAYS EASES CITY FEARS

EQUAL: Varley will offer existing shareholders the same terms

Tuesday June 17,2008

By Peter Cunliffe, Deputy City Editor

BARCLAYS eased City jitters yesterday with plans to raise billions of pounds to bolster its balance sheet and an upbeat statement on current trading.

Britain’s third-biggest bank ended weeks of uncertainty by confirming it was considering raising cash from new and existing shareholders.

The company, led by chief executive John Varley, gave no details about the fundraising but it is widely expected to be in the region of £4billion, including a fresh injection from sovereign funds in the Far East and Middle East.

Barclays’ shares soared as much as 12 per cent before closing 11p higher at 329p, a rise of more than 3 per cent, bucking a downward trend on the FTSE 100 index.

Barclays has been the subject of intense speculation about a possible fundraising after rivals Royal Bank of Scotland and HBOS announced plans to raise £12billion and £4billion respectively to combat the impact of the credit crunch.

Unlike them, it is not holding a rights issue but is instead in talks about a possible share placing with foreign funds. Some analysts think it could be at a small premium to the current share price.

Existing investors will be offered the chance to buy new shares on the same terms as the funds.

Barclays is thought to be in talks with six funds, including Temasek of Singapore, which last year bought a 2 per cent stake in the company, and China Development Bank, which bought 3 per cent.

Given the fragile state of much of the banking industry, Barclays also cheered investors with a short but positive trading update.

It said group pre-tax profits in May were well ahead of the monthly average in 2007. Compared with a year earlier global retail and commercial delivered strong growth, while investment banking and investment management were in line.

Stockbroker Collins Stewart said the fundraising plans appeared attractive and shareholders should be supportive. On the trading update, it said: “This says little of use, other than meaning there is no new profits warning — which is good news in itself we feel.”