Barclays looks east for funding

By Simon Hayes on October 31, 2008 11:43 AM |

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Barclays is to raise £7.3billion from middle eastern investors to avoid being bailed out by the Government.

A deal was announced today between the Churchill Place-based bank and investors from Qatar and Abu Dhabi, among others, which will see around a third of Barclays pass into foreign ownership.

Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family is investing up to £3.5billion which would net him a 16.3 per cent share in the bank.

And up to £2billion will be raised from Qatar's sovereign wealth fund, with a further £300million from a member of the emirate's royal family, giving Qatar a 15.5 per cent holding in the bank.

Barclays chief executive, John Varley, defended the move, claiming it was good for the bank and good for investors.

He said: "There has been a significant shift in the availability of capital and economic power in the world over the last five years and we're ensuring we're aligned with those changes."

The move will give Barclays a significant commercial advantage in Middle East markets.

Barclays is also looking to raise up to a further £1.5billion from the sale of mandatorily convertible notes with existing and other investors.

Mr Varley claimed the bank has sufficient capital to avoid further fundraising, having turned down being part of the Government's £400billion bank rescue package earlier this month.

It means Barclays has a significant advantage over rivals like Lloyds TSB, HBOS and Royal Bank of Scotland, who now have the Government as a major shareholder.