barclays-pays-dearly-for-independence

Barclays pays dearly for independence

Middle East investors provide the UK bank with more cash, but the high cost of the $11.4 billion capital injection raises questions about whether government funding would have been preferable.

Sameera Anand

November 03, 2008

On Friday, Barclays raised ú7.05 billion $11.4 billion of new capital from existing and new Middle East investors and others. The funding is split into ú3 billion worth of reserve capital instruments RCIs with warrants paying a coupon of 14%, and ú4.05 billion worth of mandatorily convertible notes.

Net of commissions payable to investors and arrangers Credit Suisse and JPMorgan Cazenove û estimated at about ú300 million û Barclays will pocket around ú6.75 billion.

Barclays made good on its promise to raise capital without drawing on funds from the UK government which its competitors Royal Bank of Scotland, Lloyds and HBOS have done. The government bailouts come with a five-year term and a...

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