Barclays Half-Year Profit Down 17% To £3.59bn

Barclays has reported a 17% drop in half-year adjusted profit of £3.59bn, as it announced a £5.8bn capital-raising rights issue.

It said adjusted income decreased 3% to £15bn, in the six months to June 30.

Barclays said a payment protection insurance (PPI) mis-selling provision of £1.3bn had been made and £650m had been put aside for provisions in relation to interest rate swaps.

The total mis-selling bill for the bank, which had been criticised previously for its aggressive corporate culture, now stands at £5.5bn.

The lender, which was hit last year by the Libor rate-rigging crisis, said it would seek a capital boost in order to meet capital requirements laid down by the Bank of England (BoE).

Past problems continue to haunt Barclays and its cash call comes after the BoE last month told it to increase its leverage ratio - a measure of equity to assets - to reduce its risk.

Barclays was criticised for its ethics under former CEO Bob Diamond (c)

Sky News City Editor Mark Kleinman said: "In the three full years since Barclays last raised equity capital from external investors, the bank has paid out £6bn in fines, £7bn in staff bonuses and just £2bn in dividends to shareholders.

"Investors will be asking tough questions about this latest cash call."

The rights issue will be for one new ordinary share for every four existing ordinary shares held and priced the issue at 185p per new ordinary share.

Barclays said: "This represents a discount of approximately 40.1% to the closing price on the London Stock Exchange of 309.05p per ordinary share on 29 July 2013 ... and a discount of approximately 34.9% to the theoretical ex-rights price based on the closing price."

The bank said its fundraising was a "bold but balanced plan" which would see it meet regulator demands by June next year.

It stressed it would not impact on its aims to boost lending to households and businesses.

However, shares fell around 5% in early trading as the rights issue was far higher than expected and as Barclays admitted its plans will put back some of the financial targets under its overhaul, dubbed Project Transform.

The bank will also issue £2bn of bonds that are turned into shares or wiped out if the bank gets into trouble.

Chief executive Antony Jenkins said the capital-raising plan enabled the bank to keep growth in its planned level of lending.

"I am certain the decisive and prompt action we are taking will leave Barclays stronger," Mr Jenkins said.

:: The bank said an estimated £42bn of Funding for Lending (FLS) capital was made to UK households and businesses in the six-month period.

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