Barclays ready for deal to plug balance sheet

Tim Wallace
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BARCLAYS is close to announcing an agreement with regulators to strengthen its balance sheet in order to meet new industry standards.

Last month the Bank of England’s prudential regulatory authority (PRA) published a review of lenders’ capital positions and found Barclays did not meet the required three per cent leverage ratio by 0.5 percentage points.

The bank had planned to plug this gap by the end of 2015, although the PRA had indicated it could require a faster timetable.

Barclays is now expected to unveil a plan to fix this ratio, drawn up in conjunction with the PRA, when the bank unveils its quarterly results on 30 July.

The bank can meet this target in a range of ways, with one option being to retain profits. However, if the bank has to accelerate its plans then it may have to cut lending, sell non-core units, or turn to the capital markets to raise funds.

The PRA does not want the bank to reduce lending and analysts believe possible outcomes include a £3bn cash call or a £7bn rights issue.