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May 16, 2021

Barclays reveals GBP 12.8 billion balance sheet hole

Barclays has revealed a GBP 12.8 billion (USD 19.6 billion) hole in its balance sheet as it announced a GBP 5.8 billion rights issue, buttressed by a plan to shrink its balance sheet and issue GBP 2 billion of contingent convertible debt, CNN informs. The bank blamed a recalculation of the Prudential Regulation Authority’s leverage ratio under new European definitions of capital. It said it had a 2.2 per cent leverage ratio under that measure, when factoring in expected losses and other charges, as at the end of June. That compared with a 2.5 per cent number reported by the PRA last month on the basis of older figures. The rights issue will be priced at 185 p per share, equivalent to a 35 per cent discount to the theoretical ex-rights price. The offering is underwritten by Credit Suisse, Deutsche Bank, Bank of America Merrill Lynch and Citigroup. In addition, the balance sheet would be shrunk by between GBP 65 billion and GBP 80 billion, Barclays said, bringing it down to GBP 1.5 trillion. Retained earnings would make up the balance of the capital gap. Barclays also announced second-quarter profits of GBP 3.6bn on an adjusted pre-tax basis, down 17 per cent. Statutory pre-tax profit doubled to GBP 1.7 billion, the bank said.

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