BUOYANT bond markets have put a possible major capital-raising programme by Barclays using innovative so-called “cocos” firmly back on the table, it is understood.
The bank, which has seen most of its top management changed after a series of gaffes last year, is believed to be considering raising £2 billion to £3bn to help beef up its balance sheet.
Cocos – contingent convertible capital – change into loss-absorbing equity at times of crisis. They have been looked at much more seriously by banks in the wake of the 2008 financial crash.
Barclays used these bonds to raise £1.9bn last year, at which time the bank – where new chief executive Antony Jenkins has replaced Bob Diamond – said it might do it again if necessary.
One source said: “Bond markets are buoyant at the minute so you can see why Barclays might be tempted to go back in.
“There is definite market noise on that subject. Having said that, sentiment in bond markets can turn on a dime, so it is not a definite done deal that it will happen.”
Barclays declined to comment.
Sir Mervyn King, governor of the Bank of England, has warned banks that they need to bulk up their balance sheets because there could be a black hole of up to £60bn in their books – made up of a mixture of bad debts and inadequate amounts set aside for meeting the cost of regulatory scandals, including Libor, payment protection insurance, and mis-selling swap derivatives to small businesses.