Barclays pursues self-determination backed by Government guarantee

by Gill Montia

Story link: Barclays pursues self-determination backed by Government guarantee

Barclays has expanded on its plans to avoid becoming part-nationalised by increasing capital through a £6.6 billion fundraising and cutting costs.

The bank says it is confident that it can do this in time to meet the Treasury’s new capital targets for banks by the 2008 deadline, and has indicated that it has already secured, in principle, a £1 billion injection of cash from an existing investor.

The group’s chief executive, John Varley, says he is keen to protect the group’s right to self-determination because this will leave it better placed than its UK rivals, which will in future be restricted by their part-nationalisation.

Mr Varley adds that over last weekend, the Financial Services Authority and the Treasury stress-tested the bank’s stability and that the fundraising will increase its Tier 1 capital to 11%.

In the meantime, Barclays will benefit from the Government guarantee that formed part of yesterdays bail out and can still access an injection of cash from the Treasury, if its fundraising fails.

However, the terms of any investment in the group by the UK taxpayer may be more painful than those applied to Royal Bank of Scotland, HBOS and Lloyds TSB.