Barclays Share Price: Lender Nearing Deal with UK Regulators
iNVEZZ.com, Thursday, July 25: Barclays Plc (LON:BARC) is near to agreeing a deal with the Bank of England’s Prudential Regulation Authority (PRA) unit that would see it comply with new rules for minimum equity-to-loans ratio by December, 2014, the Financial Times reporter yesterday, citing unnamed sources. According to the sources the bank is likely to announce the deal next Tuesday, along with its annual results.
The Barclays share price rose 0.45 percent to 322p in today’s trading session in London as of 8:32 BST.
New European regulations under the incoming Basel III global rulebook call for banks to maintain a minimum equity-to-assets ratio (leverage ratio) of three percent, with banks which currently do not comply with the rules given five years to achieve the minimum. However, UK regulators have drawn up plans for stricter timetables.
Last month, the PRA said that two of the UK’s top banks – Nationwide and Barclays – fell short of the three-percent minimum. Former Bank of England governor Lord Mervyn King insisted that the banks achieve the minimum ratio by the end of 2013.
King, who retired last month, has made little secret of his distrust of Barclays ever since the financial crisis. He was convinced that the lender’s balance sheet was too big and risky for the capital that supports it. King intervened last year to insist Robert Diamond be ejected as Chief Executive Officer of Barclays.
According the sources cited by the FT, Lord King was among a handful of BoE officials who pushed for an expedited leverage ratio to be included in the exercise at the last minute.
“This was Mervyn’s little nuclear present to Barclays,” said one source, as quoted by the FT. “He was determined to get them somehow before he left.”
!m[Bank To Announce New Deadline for Complying with New Rules](/uploads/story/4325/thumbs/pic1_inline.png)
Barclays and Nationwide have argued that that complying with the minimum by the end of 2013 could constrain lending – comments that Lord King criticised as aggressive lobbying. Nonetheless, a fortnight ago Nationwide secured a 2015 deadline, for achieving the required minimum. And now it seems that
Barclays is close to securing a 2014 deadline for complying with the new rules, which would force it accelerate its original plan to meet the minimum by 2015. The banking group, however, said that it would be doable, without radical changes of strategy.
**The Barclays share price was318.05p as of 10.35 BST, 25.07.2013**