Racy past catches up with Barclays

Barclays announced it will tap shareholders for funds to cover potential future losses.

Barclays has bowed to Britain's Prudential Regulation Authority (PRA) and agreed to raise more money to cover potential losses on loans and investments. That will reduce the odds of a state bail-out. The PRA insisted on a leverage ratio of 3%, meaning that the bank must hold £3 of capital to support £100 of assets.Barclays had a 2.2% leverage ratio at the end of June. That implies a hole of £12.8bn. To make up the difference the bank will tap shareholders for £5.8bn, issue £2bn of bonds, and shrink the number of assets on its balance sheet.

What the commentators said

Remember, however, added Ben Chu in The Independent, that a 3% leverage ratio still means that the bank's assets only need to slide in value by 3% to leave taxpayers potentially exposed again. No wonder many have suggested that leverage ratios should be 4% or higher. In America, watchdogs are considering a ratio of 6% for the biggest banks. There's still more work to be done by the "Threadneedle Street Taliban" to make banks safer.

Recommended

Get healthy returns from these three healthcare stocks
Share tips

Get healthy returns from these three healthcare stocks

Professional investor Paul Major of the BB Healthcare Trust highlights three of his favourite healthcare stocks.
25 Oct 2021
Share tips of the week – 22 October
Share tips

Share tips of the week – 22 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
22 Oct 2021
Three dividend stocks from the dynamic Asia/Pacific region
Share tips

Three dividend stocks from the dynamic Asia/Pacific region

Professional investor Sat Duhra of the Henderson Far East Income investment trust highlights three of his favourite stocks.
18 Oct 2021
Share tips of the week – 15 October
Share tips

Share tips of the week – 15 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
15 Oct 2021

Most Popular

Properties for sale for around £1m
Houses for sale

Properties for sale for around £1m

From a stone-built farmhouse in the Snowdonia National Park, to a Victorian terraced house close to London’s Regent’s Canal, eight of the best propert…
15 Oct 2021
How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
Emerging markets: the Brics never lived up to their promise – but is now the time to buy?
Emerging markets

Emerging markets: the Brics never lived up to their promise – but is now the time to buy?

Twenty years ago hopes were high for Brazil, Russia, India and China – the “Brics” emerging-market economies. But only China has beaten expectations. …
18 Oct 2021