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Barclays rights issue "won't boost its stock"
On Friday, Barclays launches its GBP 5.8 billion rights issue; the biggest by a British bank since 2009. It needs to the money to cushion against any potential market shocks.
The rights issue offers existing shareholders one new share for at 185 pence for every four they currently own. Barclays’ plan to bolster capital also includes retaining earnings, selling GBP 2 billion of bonds and shrinking loans.
But as Saxo Bank's Peter Garnry explains, Barclays has more problems than just it's capital, it also has the issue of mis-sold interest rate swap products that could create a whole new series of troubles for the bank.
He adds that the stock may be fairly valued, but there are better financial investments out there if you are looking for a good return on equity, in particuler French banks.
And the fact that Barclays is trading below book value, raises questions about its profitability.
01:25 minutes
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