Barclays turns to Middle East for funding

Barclays branch

Barclays is turning to Middle Eastern investors in its efforts to boost its capital ratios by £7.3 billion without using the Government’s rescue programme.

The royal families of Abu Dhabi and Qatar are set to own more than a third of the UK’s second biggest bank once the deal goes through. The Qataris, who already have holdings in the bank, will take a 15.5% stake in return for around £2.3 billion.

Sheikh Mansour Bin Zayed Al Nahyan of the Abu Dhabi royal family is pumping in around £3.5 billion and could become the bank’s largest shareholder with a 16.3% stake.

The move means that Barclays will not have to go down the part-nationalisation route taken by HBOS-Lloyds TSB and Royal Bank of Scotland. It is also looking to raise a further £1.5 billion from the sale of mandatorily converted notes to institutional investors.

Barclays chairman, Marcus Agius, said: "Given the continuing uncertainties in world capital markets, the board of Barclays resolved to satisfy the capital raising requirements agreed with the UK authorities without delay. This we have done. The board believes that this maintains Barclays as a strong, independent and well capitalised bank."

In its latest trading update, Barclays said that pre-tax profit for the first nine months of the year was slightly ahead of the same period in 2007 and announced further net losses from credit market write-downs of £129 million.

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