Saturday, November 1, 2008

Barclays' shareholders angry at generous terms of £7bn Middle Eastern fund raising

By Katherine Griffiths, Financial Services Editor Last Updated: 10:21AM GMT 01 Nov 2008

Barclays has angered shareholders by offering new Middle Eastern investors a more generous than expected package in return for capital which will see the UK bank raise £7bn from the private sector.
The deal will mean Barclays is the only major British bank which will not have to take money from the taxpayer, keeping it free of the constraints the Government has said it will impose on dividends, bonuses and lending levels.
But that freedom has come at a high price. Analysts yesterday estimated the financing will cost Barclays at least £1bn more than if it had used the Government’s bail-out package, which is being taken up by Royal Bank of Scotland, Lloyds TSB and HBOS.
Sandy Chen, an analyst at Panmure Gordon, said: “The terms of this capital raising are expensive, especially compared to the financing terms that had been on offer from the UK Government.” Alex Potter at Collins Stewart said: “Government intervention is being avoided at a very high cost.”

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