Barclays is set to unveil a £2bn-plus rescue package that will see the Qatar Investment Authority boost its investment in the British bank where it already owns an 8 per cent stake.
A deal that could be announced in days will see the Qataris subscribe to £1bn worth of new loan stock with another £1bn being taken up by Barclays' existing institutional investors.
The special new shares will be high-yielding securities that will pay a relatively high rate of interest. The funds will allow Barclays to say that it is on track to meet new government requirements that force banks to raise additional cash to meet tighter capital adequacy ratios in the wake of the credit crunch.
One observer said: 'The great thing about the plan is that it will enable chief executive John Varley to underline his commitment to recapitalise the bank without seeking government help.'
HBOS and Royal Bank of Scotland are effectively being taken over by the state after being hobbled by the global financial crisis. But Varley has stated that Barclays has an independent future and will not draw down on funds that were part of a bail-out of Britain's struggling banks, announced by the Treasury this month.
Barclays is expected to raise another £3bn, possibly via a conventional rights issue, after it publishes annual figures in February. Analysts expect that the numbers will be strong enough to persuade investors to subscribe to new ordinary shares as part of a project to raise as much as £10bn via capital raising, dividend cuts and cost savings. Last week, Barclays issued a £2bn bond under the government's new debt-guarantee plan. In the summer, it raised £4.5bn from overseas investors that included the QIA and Sumitomo Mitsui Banking Corporation, while last year China Development Bank and Temasek of Singapore acquired small stakes.
Separately, RBS is to announce this week that it is being hit for around £5bn of further asset write-downs. At the same time, it will give a trading update and launch the prospectus for its £20bn government-backed rescue.
Analysts at KBW are forecasting hefty write-offs, on top of the £5bn charge taken at the start of the year, which would push RBS's profits before tax down to just £582m, compared with almost £9bn in 2007. The bank is expected to confirm that it is continuing negotiations over the sale of its Direct Line insurance business.
Lloyds and HBOS are expected to launch the prospectuses for their share issues next month.
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