Jenkins on Barclays' need for £12.8bn


Barclays will raise £5.8bn through a new share issue, to shore up its finances

Barclays was widely regarded as one of the UK's strongest banks.

So it is remarkable that its regulator, the Bank of England's Prudential Regulation Authority, has ruled that it needs to fill a hole in its capital resources - the funds that it puts aside as a protection for depositors and creditors - of £12.8bn by the middle of next year.

It is the only one of the UK's biggest stock-market banks that has been set such a challenge.

Barclays is meeting it by asking its shareholders to provide almost £6bn of new equity, by selling bonds to raise a further £2bn and by shrinking its balance sheet - in essence the credit it provides - by up to £80bn (it is doing this largely by reducing investment banking activity in derivatives and financing of securities deals).

Barclays chief executive Anthony Jenkins, speaking to me on the Today programme, insisted that there would be no reduction in the supply of vital loans to small businesses and households.

Barclays also disclosed that it expects to incur a further £2bn of losses from paying compensation to people missold PPI insurance and small businesses missold so-called financial products called swaps.

You can listen to my full interview with Anthony Jenkins. I began by asking him if by requiring Barclays to fill a £12bn hole in its accounts, the Prudential Regulation Authority is actually saying that the bank had been somewhat reckless?

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 67.

    Barclays was widely regarded as the Cowboys of UK banking Robert as you well know. 2008 Qatar dodgy loan deal ring a bell? Pretend we don't need a bail out. shift £bns around to loan back to ourselves. Meanwhile LIBOR (set up by the BBA who spend more money bribing the Govt than anyone else - is this really a democracy?)) was being fiddled to make a quick £10bn and PPI ditto. Barclays = jail

  • rate this

    Comment number 66.

    Banks are still broken and are still too big to fail. See Leverage Ratio. If you had £100 and wanted to lend money how much do you think you could lend legally? If your loan went bad how much would the tax payer pick up? How much would you as a highly paid bank executive get paid to take high risks at the expense of the taxpayer?

    How much will our politicians do to stop this? Nothing.

  • rate this

    Comment number 65.

    Hmm, if I was a shareholder in Barclays I would be rather upset.

    How much in bonuses? How much in LIBOR/PPI repayments (the above bonuses were calculated on these fraudulent sales/market manipulation).

    Barclays surfed the banking wave, got £Bns bailout from the Mid East Oil Corp to pretend it wasn't bust and now is admitting it hasn't enough money to cover its loans by even moderate standards.

  • rate this

    Comment number 64.

    @63 Barclays shares are down only 20% over the last five years (over which time you should have received dividends, of course). You have to go back six years to get a 50% fall (but there was this banking crisis you may have heard mention of). Then again, there's been a 100% increase since the start of 2009. Yes, it's a negative dividend - a well-deserved one, I would say.

  • rate this

    Comment number 63.

    This amounts to a big negative dividend. If you are a shareholder, you expect to receive a fair annual return on your investment. However, seems that we are being required to put more money in. My Barclays shares have dropped in value by around 50% over the last 5 years and the associated dividend stream has dropped by around 70%. I don't even know what to think about it.


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