Related Companies

• Barclays
• HSBC Holdings

Related Indices

• FTSE All-Share
• FTSEurofirst 300
• FTSE 350
• FTSE 100

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• Banks

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Digital Look's Best Picks

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Your money can work for you! Get it going with one of this month’s high interest current accounts:

1. A&L Premier Direct
2. Coventry First Account
3. Co-operative Current Plus

Date: Friday 10 Oct 2008

LONDON (ShareCast) - Barclays shares tumbled again today as it confirmed it is looking at raising capital alongside other options to strengthen its balance sheet.

"Barclays confirms that it is considering a number of options, including capital raising, relating to the industry wide commitment to increase tier 1 capital in the sector by an aggregate £25bn," the bank said in a statement.

Reports yesterday suggested Barclays has already started to sound out its major shareholders about a preference share issue, rather than go to the government for the money. The coupon on the preference shares is expected to heavy at about 10% and there may be an equity element attached, possibly through a warrant or a conversion option.

The bank has already tapped shareholders once this year, raising £4.5bn with a placing to sovereign wealth funds in Qatar, Singapore's Temasek and Japanese bank Sumitomo Mitsui.

Analysts suggest Barclays needs to raise between £2.5bn and £5.5bn of extra capital. "Barclays will update the market on its plans in accordance with this timetable," the bank said.

Eight major saving and lending institutions in the UK signed for the government’s £500bn unveiled on Wednesday, including Barclays. As part of the deal, which offers up to £50bn in new equity if the banks want it, they agreed to boost their Tier 1 capital ratio, a key measure of a bank’s financial strength, by 1% on average to about 10%.

Rival HSBC yesterday injected £750m into its UK business to boost its balance sheet to the strength demanded under the UK bail-out scheme.

• News Channel