BARCLAYS has made a £2.5bn offer to buy back its debt in order to bolster its capital levels.
If taken up by holders of the bank’s bonds, the move could book Barclays a profit and reduce the amount of its debt that is non-compliant with new Basel III capital rules.
The bank is offering a price for the bonds that is above their current market price but less than the cash it raised by selling them, hence the potential for it to make a profit from the deal.
The move will make concrete some of the “own credit” earnings that many banks booked in recent results statements, despite most of them having not actually realised the gain by buying back their debt.
Investors could decide to participate if they see it as an opportunity to cut their losses and avoid suffering further drops in the value of their bonds.
The bank did not provide an estimate for how much it could see its capital ratio bolstered by the deal.
Barclays will see £17.7bn of its debt mature next year, according to analysts, and therefore is likely to have to issue new bonds in a highly uncertain regulatory atmosphere exacerbated by the UK’s Vickers Commission.