Banking blues: Investors uneasy over speculation of a Barclays rights issue

Its shares were down on the FTSE 100 Index amid speculation the banking giant is mulling a dilutive £4bn rights issue to satisfy regulators’ concerns about its financial strength.

The bank’s advisers reportedly sounded out investors about a potential rights issue last week as it looks for ways of meeting tough new demands from the Bank of England over capital levels.

Barclays, whose chief executive is Antony Jenkins, pictured, is expected to raise fresh funds by issuing shares or selling bonds which convert into equity, and said it will reveal plans to appease regulators alongside its first-half results today. The bank added it noted speculation about a share issue and has been talking to regulators.

Banking analyst Ian Gordon, of Investec Securities, said a multi-billion pound share issue would be disappointing and unnecessary. The lender is also expected to report bigger-than-expected provisions to account for previous mis-selling of interest rate swaps, payment protection insurance (PPI) and identity fraud protection.

The bank has already set aside £2.6bn to cover the PPI scandal.

Picture: Rex Features