Barclays is to issue £5.8bn in new shares after revealing it faced a £12.8bn capital shortfall created by new regulatory demands.
The Prudential Regulatory Authority (PRA) introduced a 3% Leverage Ratio on 20 June 2013, aimed at ensuring banks are protected from the risk of investment losses.
Barclays today announced a 2.2% PRA Leverage Ratio, representing a gap of £12.8bn.
Sir David Walker, chairman of Barclays, said: “After careful consideration of the options to meet the PRA request for a 3% leverage ratio by June 2014, the board has decided on a set of actions, including the rights issue, to meet this target, whilst continuing to deliver our strategy under the Transform programme.
“The PRA has agreed and welcomed out plan. As a result we expect Barclays to be in an even stronger capital position, allowing us to increase the dividend pay-out ratio ahead of the original Transform target.”
Barclays also announced it will issue £2bn of bonds that can be turned into shares, or wiped out, should the bank encounter further financial difficulties, as well as reducing the level of risky assets on its balance sheet by £60bn to £80bn.
The bank reported a 17% fall in adjusted second quarter pre-tax profit to £3.6bn.
Andrew Jenkins, Barclays chief executive, said the results “demonstrate the strength of our business.”
He said: “We saw good momentum in our performance and the execution of our Transform plan is progressing well.
“Adjusted profit before tax was £3.6bn, excluding an additional £1.34bn charge in respect of PPI redress and an additional £650m for Interest Rate Hedging Products.
“This takes the total provision Barclays had made for both issues to £5.45bn, of which £3bn is unspent, reducing uncertainty for shareholders around these conduct risks.”
Barclays unveiled its Transform plan in February 2013, aimed at improving the banks image and turning it into a “Go-To” bank.