Barclays rights issue looking likely and executive quits

02 May 2008 / by Rachael Stiles
Amid announcements that trading has been difficult and Barclays could be facing a rights issue, its chief operating officer has quit following frustrations over the running of the bank.

Barclays is under pressure to request more than £4billion from its investors to bolster its balance sheet after John Varley, the company's chief executive, said last week that its core tier-one capital ratio – used by regulators to assess the bank's strength – is at 5.1 per cent, short of its 5.25 per cent target.

Rumours are rife that Barclays will follow in the footsteps of Royal Bank of Scotland and HBOS, which have both launched multibillion pound rights issues. The Bank of England is also putting pressure on the banks to add to their capital.

While not ruling it out, however, Britain's third biggest bank was dismissive of a rights issue at its annual meeting last week, despite admitting that it needs to raise around £1billion to lift its ratio, and the fact that RBS and HBOS are raising theirs to six per cent or more.

Barclays insists that can raise the cash in other ways and has ample time in which to do so; it is considering managing its exposure to risk, slowing its growth or increasing profits before resorting to a cash call.

Meanwhile, Barclays' chief operating officer, Paul Idzik, is expected to announce his departure from the bank today, a decision that is thought to be influenced by the failure of the bank to win a takeover battle with RBS for ABN Amro, which would have provided him with new challenges at the bank.

Recognised as the man who once vaulted over the Barclays security gate in the wake of the July 7 bombings to test its security, the American has been with Barclays since 1999 and will leave later in the year.

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