Britain’s Barclays bank said on Tuesday that it would issue 5.8 billion pounds ($ 8.9 billion) in new shares after regulators said it needed to plug a shortfall in capital.
The Prudential Regulation Authority (PRA) recently announced stricter capital requirements for British banks to insulate them in case of another financial crisis. Under the new rules, Barclays was found to have a shortfall of 12.8 billion pounds.
The announcement came as results showed the bank’s profits fell 17 per cent to 3.6 billion pounds in the first six months of 2013, compared with the first six months of last year. That excluded higher-than-expected compensation bills for mis-selling products, which so far total 5.5 billion pounds.
The bank also plans to reduce its exposure to risky investments by 65 billion to 80 billion pounds and issue another 2 billion pounds in bonds that could be turned into shares or revoked if the bank gets into difficulties.
Chief executive Antony Jenkins said the plan was bold but balanced and that it presented “the right combination to meet the PRA’s leverage target.” Despite having initially declared that the authority’s requirements might force Barclays to cut lending to businesses, he said, “We believe Barclays will be stronger for taking decisive action today.” The authority said it had “agreed and welcomed” the bank’s plans.