Barclays may launch cash call on anniversary of U.S. Lehman deal

Reuters
A lamp featuring a logo of Barclay's bank is seen outside a branch in London
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A lamp featuring a logo of Barclay's bank is seen outside a branch in London October 31, 2011. REUTERS/Suzanne Plunkett

By Steve Slater

LONDON (Reuters) - Barclays Plc (BARC.L) is set to launch its 5.8 billion pound ($9 billion) rights issue in two weeks, possibly on the fifth anniversary of its takeover of the U.S. operations of Lehman Brothers, people familiar with the matter said on Monday.

The one-in-four offer, priced at 185 pence a share, is expected in the third week of September, they said. Barclays did the Lehman deal on September 16, 2008, a day after the U.S. investment bank collapsed.

The British bank declined to comment, but has previously said it expects its new shares to start trading on October 3.

Barclays unveiled basic details alongside half-year results on July 30 after Britain's financial regulator said it needed an extra 12.8 billion pounds to cushion it against potential market shocks, based on a new measure of its leverage.

The bank's share price has held relatively steady since that date - dropping 7 percent. The shares were up 1.5 percent at 287.7p by 1430 GMT alongside a strong European bank index (.SX7P), valuing the bank at 37 billion pounds.

The rights issue, the biggest by a British bank since 2009, could run into competition from the sale of Britain's shares in Lloyds Banking Group (LLOY.L). The government could sell 4-6 billion pounds of its Lloyds stake in the next few weeks before national political party conferences in late September, industry sources have said.

Investors said that there should be appetite to buy shares in both stocks despite regulatory pressures squeezing banks' profitability and forcing them to restructure.

Barclays' plan to bolster capital also includes retaining earnings, selling 2 billion pounds of bonds and shrinking loans, notably in its investment bank.

Its purchase of the U.S. Lehman business five years ago has been regarded as a success, giving it a strong position to challenge Wall Street's dominant firms, but increasing its reliance on investment banking, which Chief Executive Antony Jenkins is now scaling back.

Barclays is global co-coordinator for the offer. The other main advisers and underwriters are Credit Suisse, Deutsche Bank, Bank of America Merrill Lynch and Citi.

($1 = 0.6465 British pounds)

(Editing by Louise Ireland)

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