Barclays faces shareholder revolt over capital raising

LONDON (Reuters) - Some of Barclays' biggest shareholders have threatened to vote against its planned 7 billion pound capital raising unless it improves the terms of the deal, newspapers reported on Wednesday.

The Financial Times and the Telegraph newspapers said Legal & General Investment Management and Aviva Investors had raised the prospect of voting against the plan at Barclays' shareholder meeting on Nov 24.

Most big British banks were told to increase their capital by the Financial Services Authority last month. Rather than take government rescue funds, Barclays opted to raise funds privately and struck a deal with investors in Abu Dhabi and Qatar.

Barclays' go-it-alone approach won it plaudits at the time, but questions have since been raised over the price it is paying to secure the funds and the extent to which existing shareholdings will be diluted.

If the capital raising plan goes ahead in its current form almost a third of the bank will be owned by Middle East investors.

The Financial Times reported that Barclays was willing to explore amending the terms of the deal. However, if a compromise cannot be reached, and shareholders carry out their threat, it would be a big blow to Barclays' management team, led by John Varley.

The dispute may come to a head on Friday, when members of the Association of British Insurers, which represents a fifth of all UK investors, meet senior Barclays executives, including Marcus Agius, the bank's chairman, the FT said.

(Reporting by Christina Fincher; editing by Philippa Fletcher)