Barclays boss denies bank was run "recklessly"

Wednesday, 31 July 2013 09:13

Barclays Bank has announced that it will be raising £5.8 billion from investor cash in order to strengthen its balance sheet, after recent figures suggest that the bank made huge pre-tax profit losses in the first half of 2013.

The admission that the bank must raise capital prompted chief executive Antony Jenkins to deny that the bank had been run in a "reckless" manner.

The £5.8 billion call for investor cash is to help the bank fill a £12.8 billion capital shortfall due to regulatory demands. The bank is also to issue £2 billion of bonds that can be turned into shares if the bank gets into financial difficulty.

The group is planning to issue new shares at discounted rates so that it can boost its finances by an extra £12.8 billion; this being on top of the extra cushion finances that Barclays is setting up for any future potential crises. The bank will also issue £2 billion in bonds, which will be turned into shares or wiped out if the bank gets into financial trouble.

This announcement came after the half-year results from the bank found that underlying pre-tax profits for Barclays had fallen by 17 per cent to £3.6 billion across the first six months of 2013. This major loss has been attributed towards compensation for mis-selling products and the restructuring of the group following the recent Libor Rate scandal. The bank will also be saving £650 million for mis-selling swap prate products to small businesses, meaning that Barclays' total mis-selling bill is mammoth £5.5 billion so far.

Chief executive for Barclays Antony Jenkins said: "I am certain the decisive and prompt action we are taking will leave Barclays stronger."

Chris Lucas, group finance director, added: "Enhancing our financial strength remains a central focus, and we continue to make steady progress adapting to the new regulatory environment."

Barclays has already stated that this fundraising will in no way impede on its plans to boost lending to both businesses and homes. Both the Bank of England and the Prudential Regulation Authority (PRA), the latter of which recommended the bolstering of the bank's finances, have welcomed the plans and have suggested that they will not cause any lending cuts for the wider economy.

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