Barclays secures capital raise ahead of potential coronavirus loan losses
LONDON (Reuters) – Barclays BARC.L told investors on Monday that recent regulatory changes had increased its capital base, giving the UK bank a bigger buffer to absorb any further loan losses during the coronavirus crisis.
The bank said it plans to publish a CET1 capital ratio of 14% in its half-year results later this month, up from 13.1% at the end of March and ahead of market expectations. .
Barclays also said it expected risk-weighted assets to be lower than previous forecasts.
The bank said its half-year results would reflect difficult earnings and write-downs in its consumer and corporate activities, but the strength of its revenues in the markets.
Barclays shares rose nearly 2% at 11:35 a.m. GMT after the announcement, making them the biggest winners among FTSE 100 banks on the day.
John Cronin, banking analyst at Goodbody, said it was likely other banks could see a similar capital increase thanks to recent rule changes, including a relaxation of capital accounting rules rolled out in June.
“The new guidance also suggests deficiencies below consensus, which is not surprising given improving market expectations amid lows in GDP and unemployment,” Cronin added.
“However, many customers are still on a payment break and it is very early in the context of loan losses.”
Reporting by Iain Withers; Editing by Tom Arnold and Jane Merriman