Barclays move to appease rebel shareholders

By Simon Hayes on November 18, 2008 10:30 AM |

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Barclays' £7billion deal to raise capital could be under threat from rebel shareholders and it could spell the end for the bank's existing board.

The Canary Wharf-based bank apparently sealed agreements with a number of Middle Eastern investors to raise the capital it needed to secure its future.

But existing shareholders were unhappy with last month's deal and have threatened to block the move, which they claimed diluted their holdings.

In a surprise move this morning the bank announced its board will be offering itself for re-election at its annual general meeting next April.

This means disgruntled shareholders could, if they wished, remove the men who struck the Middle East deal.

Normally only one third of the board would be seeking re-election.

Barclays have moved to appease existing shareholders by making £500million in high-yield securities available to them.

The Middle East investors are understood to be keen to ensure existing shareholders are involved in capital raising and Barclays have agreed to this.

Barclays said in a statement: "A number of meetings and conversations have taken place between senior officers of Barclays and Barclays major institutional shareholders.

"The discussions have been constructive and the board of Barclays has listened carefully to shareholders' views."

And Barclays senior executives, including chief executive John Varley and president Bob Diamond, have said they will not take a bonus for the 2008 financial year.

Barclays did not wish to participate in the government's £37billion bail-out of other British banks, including Lloyds TSB and HBOS.