Barclays 'facing revenue fears'

4 September 2008

Barclays must raise a further $13.3 billion in order to bring its capital ratios in line with those of rival firms, a new note from RBS suggests.

According to the analysis, it is the "performance-led culture" at Barclays that is to blame for this shortfall - with the bank more likely to enter into highly-geared, debt-heavy deals than its peers.

News of the potential future capital-raising follows the $9 billion rights issue completed by Barclays in July, which brought up its Tier 1 capital ratio to 6.3 per cent.

In the note, RBS analyst Ian Smillie commented: "[The] deeply ingrained performance-led culture facilitated the generation of [$16 billion] of economic profit over the last four years.

"It has, however, also led Barclays to a higher level of balance-sheet gearing than peers, an uncomfortable position in the current environment of financial system de-leveraging and heightened external scrutiny of banks' balance sheets."

Mr Smillie added that the bank might now launch a new rights issue in order to make up the shortfall.

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