Jenkins on Barclays' need for £12.8bn

 

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, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +1

    Comment number 27.

    Another sign that the banks are far from out of the woods, but it is another step toward "normalisation" of the banking system.

  • rate this
    0

    Comment number 26.

    Barclays are managed by the same sort of people who brought the economy to its knees, and they won't escape the fallout, they are delaying the inevitable with their rights issue, how long before they get on the government benefits wagon?

  • rate this
    +3

    Comment number 25.

    So...let me see if I have this right..

    They have just announced 3.8 billion profit
    But instead of using that to fill this "hole" they go cap in hand to shareholders to stump up more money
    The bonus pool is untouched.
    They might lose 2 billion in compensation claims for PPI
    They might lose an undisclosed amount due to Libor Etc.
    They are shrinking the business.

    Hmmm.

    "Sell"

  • rate this
    0

    Comment number 24.

    well you asked that last question RP, but the man doesn't know the answer or does he?
    you could ask Sir cunliffe , from the PRA transparency my foot.....
    I think we all really know the answer, but we want to remain in that printed money forest in the sky, smoking the cash....
    or maybe it will all be revealed in GOs autobiography, soon to be commissioned......

  • rate this
    -3

    Comment number 23.

    19. A White

    They're doing because they (i.e not the regulator), recognise that it would be a prudent move. It's their decision.

  • rate this
    -2

    Comment number 22.

    Evil bank asks evil shareholders (no one else) for more money and everyone starts kicking off, I also reckon the Government will get brought in at some point in these comments... thoughtless Trolls paradise... anyway for those interested look up Risk Weighted Assets and Capital Ratios and you'll see why they are reducing their risky lending.

  • rate this
    +4

    Comment number 21.

    @4 stereo
    Not necessarily. There are other ways to re-work balance sheets but RP didn't mention that on air (TOADY prog) or in the Blog. In addn, nearly everyone seems to forget that to lend, you need a willing borrower to need the money & be willing to pay the rate offered.

    In an era of zero Base, borrowers (unless desperate) obviously feel the margins are wrong, not in their favour.

  • rate this
    0

    Comment number 20.

    One by one the pieces fall into position.....



    ....soon it will be impossible to claim that Co-Op bank was in anything like the worse state.....



    ....noticeable too that Co-Op didn't need a tax payer bail out......

  • rate this
    0

    Comment number 19.

    Richard did not you and your fellow hacks say the Goodwin was being prudent when he did something similar to raise money to plug a hole as was said at the time. ?

    As for Mr Boy comment 15 "nobody forcing Barclays" ok so why are they doing it then if there is no need to ?

  • rate this
    -2

    Comment number 18.

    Barclays defraud pensioners out of ownership of their propertys - which in many cases represent their life savings. They manipulate the legal system, governments, and markets. They are able to do this because of the way money is created, and the way banks run their balance sheets.

    ..and you sit there asking such totally inane questions? You're a clown they're using for their own ends Mr Peston.

  • Comment number 17.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 16.

    Robert, enjoyed listening to the interview, proper investigative journalism.

    Interested to see the details. The Guardian describes the rights issue in more detail, haven't seen much about the bonds yet.

    I guess anyone who doesn't want the rights could just sell them, they'll have a market value.

  • rate this
    -3

    Comment number 15.

    Typical sensationalism from Peston.

    Nobody is forcing Barclays to do anything. They are taking prudent steps now.

    I suspect, that as with the banking crisis, Barclays will be ahead of the game compared with other UK banks.

  • rate this
    0

    Comment number 14.

    stereotonic
    I only asked because the article clearly states where the savings are being made.

  • rate this
    0

    Comment number 13.

    10. Money
    "As a Phd holder and Chartered Accountant I don't see what the problem is here."

    Perhaps you have an over inflated opinion of your skills and capabilities?

  • rate this
    +1

    Comment number 12.

    Barclays was the UK retail bank that dove the deepest into the world of investment banking

    With it came funny accounting practices, humongous bonuses, redirecting of retail capital to speculation and influence with the regulator (recently hiring the ex-head of the FSA)

    In the UK nothing but windowdressing was done to fix any of this, so Barclays remains one market mood change away from collapse

  • rate this
    0

    Comment number 11.

    I guess this has more to do with the new broom coming into the BoE and the experience of US banks which were forced to take on more capital at a much earlier stage than our banks. If the object is to minimise the limbo period of the British economy be forcing the banks to become financially stronger then it can only be a good thing.

  • rate this
    -3

    Comment number 10.

    As a Phd holder and Chartered Accountant I don't see what the problem is here.
    Anyone criticising Barclays have no clue and should stop smoking anything they put their hands on
    #jf

  • rate this
    0

    Comment number 9.

    @5 Treacle

    Thanks, does that mean Stockholders giving a bit back?. . . . .If so, thats a very scary thought because they will only put in if the profits are big enough. . . . ..

    Captain Senseless. . . . Yes I did read every word which is why I commented on paragraph 5. Banking is not my forte which is why I ask questions that treacle very kindly answered for me. . . . Don't be a bit**

  • rate this
    -2

    Comment number 8.

    4 stereotonic
    Did you actually read the article before commenting?

 

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