BARCLAYS' SHARES jumped in London trading yesterday after the bank eased concerns that selling more stock will hurt current shareholders and said earnings last month were better than a year earlier.
Barclays, the UK's fourth-biggest bank by market value, gained as much as 13 per cent after saying that existing investors may be able to participate in a share sale to select investors.
Pretax profit last month was "well ahead" of a year ago, the London-based bank said.
Chief executive John Varley may need as little as £4 billion to restore capital and may let existing shareholders "claw back" stock on terms offered to sovereign wealth funds such as China Development Bank and Temasek Holdings Pte, analysts at Keefe, Bruyette Woods said yesterday.
That sum would be a third as much as Royal Bank of Scotland Group, Britain's second-biggest bank, added to reserves. "Their backs are not against the wall like others," said Mike Trippitt, an analyst at Oriel who has a "buy" rating on Barclays stock.
Barclays rose 3.5 per cent to 329 pence, valuing the bank at £21.6 billion. The shares have dropped 35 per cent this year, underperforming the 23 per cent decline of the eight-member FTSE 350 Banks Index. Barclays could bring its core equity Tier 1 capital, a measure of financial strength, to about 6 per cent without selling more than £4 billion pounds of new stock, analysts estimated.
"This is clearly less dilutionary than a rights issue and also solves the capital-shortfall perception," said Alex Potter, an analyst in a note to clients yesterday.
Banks worldwide have raised almost $310 billion to help cover losses of $392 billion since the collapse of the US mortgage market destabilised credit markets.
- (Bloomberg)
