Barclays shares dive after rights issue offer comes to an end

Tim Wallace
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SHARES in Barclays plunged sharply yesterday after the deadline for investors to be eligible for discounted stock in the bank’s rights issue.

But the fall in price was less sharp than feared, indicating investors remain upbeat on the bank’s earnings potential.

Yesterday shares dropped 7.29 per cent to 277.2p.

The stock had been pumped up by the £5.8bn rights issue, in which the bank is raising funds from investors to plug the gap between its current capital levels and a higher level the Bank of England wants to see.

Existing shareholders were given the right to buy one new share for every four they already owned, at a lower price of 185p.

As a result buyers flocked into the market to take advantage of the discount, temporarily driving up the price. And when the offer ended, the price dropped back.

However analysts estimate that it has fallen to a level above its theoretical price excluding the effect of the rights issue, meaning it is moving up, not down.

That comes despite the bank repaying around £100m to customers over-charged interest on loans, and the news it is fighting a £50m fine from regulators over alleged misbehaviour in a 2008 fundraising round in Qatar.