Barclays Considering Raising More Capital

Add another bank to the list of those looking to strengthen its balance sheet by raising fresh capital — in this case, that bank is Barclays PLC (BCS: 25.545 +8.84%), the U.K-based bank that has absorbed more than its fair-share of write-downs tied to the U.S. mortgage mess. In a press statement, Barclays confirmed Tuesday morning various press reports that said it was potentially seeking to raise capital by selling shares to new and existing shareholders.

While saying that such an offer was “under active consideration,” Barclays did not provide further details on the size or expected timing of any capital raise. “A further announcement will be made in the event that the Board of Barclays decides to pursue such an equity issuance,” the company said.

The Wall Street Journal reported that shares in the U.K.-based bank on the London Stock Exchange surged on the announcement, rising as much as nearly 4 percent before paring gains slightly. Shares in the bank’s American depositary receipt were up 2.66 percent on the New York Stock Exchange when this story was published.

Barclays has been subject to analyst speculation that fresh capital would be in the offing shortly after disclosing that its Tier 1 core capital ratio was too low; as the credit crisis has worn on, most banks have sought to maintain a Tier 1 ratio above 6 percent. Barclays ratio registered 5.1 percent by the end of 2007.

But capital level hemming-and-hawing aside, Barclays did make it clear that at least thus far, write-downs haven’t taken a bigger than expected chunk out of the bottom line.

“Relative to May 2007,” the bank said in its press statement, “Global Retail and Commercial Banking continued to deliver strong growth in profits and in Investment Banking and Investment Management profits were in line.”

Disclosure: The author held no positions in BCS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.