Barclays eyes own investors for capital

LONDON (Reuters) - Barclays (BARC.L) is likely to boost its capital by offering existing investors the chance to take preference shares or other instruments before it taps government funds, people familiar with the matter said.

The government will offer up to 50 billion pounds of capital for banks, but said there is no obligation on banks to use the government funds and they can raise capital privately.

Barclays would probably use the government offer as a backstop, and first offer preference shares to existing investors on similar terms the government would get, the sources said on Thursday. The terms of the government's proposal and each bank's plans have not yet been decided.

Barclays said on Wednesday it would participate in the broad plan announced by the government, but would protect its shareholders. It declined to comment further.

Earlier this year, it raised 4.5 billion pounds, mainly through attracting several big outside investors, rather than through a conventional rights issue. Following that, its biggest shareholders include Qatar's sovereign wealth fund, state-owned China Development Bank CHDB.UL, Singapore's Temasek TEM.UL and Japanese bank Sumitomo Mitsui (8316.T).

The bank's Tier 1 capital is estimated to be just above 9 percent, so it could seek to raise about 3 billion pounds to lift that near to 10 percent, analysts estimated.

(Reporting by Steve Slater; Editing by Quentin Bryar)