According to Keefe, Bruyette & Woods Ltd analyst Mark Phin, should regulators require that the bank increase its leverage ratio by year's end, Barclays may go into selling new shares in order to raise funds to comply with the requirement.
In order for Barclays to comply with the 3% leverage ratio required by the Prudential Regulation Authority of the Bank of England, there would be a need to raise GBP7.3 billion or US$11.1 billion in equity. The other option would be to reduce its assets by GBP240 billion, according to Phin in his advisory to the firm's clients. The ratio would require the retention of GBP3.00 per GBP100.00 of assets.
The deputy governors of the Bank of England, Messrs Paul Tucker and Andrew Bailey both confirmed that this is the right time to impose the 3% leverage ratio immediately. This is five years ahead of the deadline imposed by the global regulatory authorities. According to Barclays CEO Antony Jenkins in a statement last week, the bank may need to reduce its lending should the PRA require the bank to immediately comply with the 3% requirement.
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