Barclays prepares to shore up £5 bn capital

Barclays Plc is planning to raise about £5 billion to shore up its capital levels demanded by the UK regulators, the BBC reported yesterday.

Barclays' chief executive, Antony Jenkins has, however, denied any conflict between his bank and Bank of England's (BoE) Prudential Regulation Authority (PRA).

Earlier, reports has said that BoE had asked British banks to increase its leverage ratio.

The row between Barclays and the establishment rose high with the publication of a strongly-worded letter in the Financial Times by the former member of the BoE's financial safety watchdog the Financial Policy Committee, Robert Jenkins. He had said Barclays could raise capital or cut bonuses to meet tougher restrictions.

The financial services major then fought back saying that if the bank is forced to meet this tough measure it could be forced to scale back its lending to small businesses and households.

According to analysts Barclays may need £7 billion of extra capital or scale back its balance sheet by 15 per cent to increase its leverage ratio from 2.5 per cent to 3.0 per cent.

Jenkins also warned Barclays may cut lending unless a new rule designed to make banks more secure is initiated quickly.

Barclays had aimed to raise its finances by 2015, but is concerned that PRA would force it to meet the requirements earlier.

Barclays is expected to unveil a number of measures including cutting back its balance sheet, raising cash from shareholders through a rights issue and also issuing bonds known as contingent convertible capital, or cocos, which turn into shares during times of crisis.

Some analysts believe Barclays does not need to raise extra capital as it can generate the amount it needs by retaining more profits and cutting back on riskier activities.

Jenkins took over the mantle at Barclays in August 2012, following the London Interbank Offered Rate (Libor) scandal surrounding Barclays' manipulation, which cost the bank £290 million ($470 million) in fines. (See: BoE calls for early Libor overhaul). (See: BoE calls for early Libor overhaul).

He had taken steps such as closing the bank's Structured Capital Markets division and, instructing the board not to award him a bonus for 2012 to trim costs. The CEO has also said that the bank may cut 40,000 jobs to become profitable.

Jenkins sees Asia and Africa as focal points of economic growth over the next 10 to 20 years.

''I do believe that here in Asia we will see a higher growth than we have seen in other parts of the world...and of course the markets in Africa where we are strongly positioned,'' Jenkins said in an interview with CNBC early this month.