Shares issue plan to help plug £12.8bn hole in Barclay's accounts
Banking giant Barclays has revealed plans to plug a £12.8bn shortfall identified by the City watchdog through an issue of £5.8bn-worth of new shares.
Barclays also took another £2bn hit for mis-selling payment protection insurance and interest rate swaps, taking the total set aside for mis-selling to £5.5bn.
However, in a sweetener to investors, the bank said that once it had closed the capital gap identified by the Prudential Regulati on Authority (PRA), it would be able to increase its dividend payouts by more than expected from 2014.
Chief executive Antony Jenkins, who took over after Bob Diamond who quit in the wake of the Libor-rigging scandal last year, said: "After careful consideration of the options, the board and I have determined that Barclays should respond quickly and decisively to meet this new target.
"We have developed a bold but balanced plan to do so."
Barclays' first-half profits fell 17 % to £3.59bn, which was slightly lower than City estimates and included a £640m charge for Jenkins' restructuring plan, which aims to save £1.5bn in annual costs and will see a total of 3,700 jobs go by 2015.
Under the rights issue, existing shareholders will be offered one new share for every four they own at 185p a share, which is a 40% discount to Monday's closing price. Yesterday Barclays shares dropped more than 6% to 287.80p by mid-afternoon.