Barclays set for bumper equity issue

By Steve Slater and Clara Ferreira-Marques

LONDON (Reuters) - Barclays said it plans to sell billions of pounds worth of shares to new and existing shareholders, sending its shares soaring on Monday as investors celebrated the move to boost its stretched balance sheet.

Britain's third biggest bank said it was considering issuing new equity, but declined to comment on the amount it hoped to raise. A weekend newspaper report said it would raise 4 billion pounds from sovereign wealth funds in a deal that could be completed in the next two weeks.

By 1:36 p.m. Barclays shares were up 4.1 percent at 331 pence after hitting 358p. They fell to a 10-year low of 293p last week on concern the bank's balance sheet was too stretched and growth was slowing.

Keefe, Bruyette & Woods analyst James Hutson said the placement and pre-emptive rights issue outlined by Barclays "would go a good way towards drawing a line under the market's current capital concerns".

Barclays said in a brief statement its profit in May was "well ahead" of the monthly run rate of 2007, which was 590 million pounds, providing reassurance that any more writedowns it has taken have been modest.

TEMASEK, CHINA

The deal comes after persistent speculation that Barclays will shore up its capital position by raising billions of pounds in a deal structured to bring in cash from outside investors but not dilute existing shareholders.

A Singapore source said Barclays had approached Singapore sovereign fund Temasek and other existing shareholders.