Barclays Seeks $9.7 Billion Capital From Middle East, FT Says

By Andrew MacAskill and Gareth Nicholson

Oct. 31 (Bloomberg) -- Barclays Plc is in negotiations for a cash injection of 6 billion pounds ($9.72 billion) from Middle Eastern governments including Qatar, the Financial Times reported, citing people familiar with the situation.

Talks between Barclays executives and investors were taking place last night and an announcement could be made as early as today, the newspaper said. The agreement may still fall apart or be delayed until the weekend, the FT said. Completion of the deal would meet Barclays' requirement for fresh capital without having to turn to the British government for money.

The London-based bank is seeking to raise 6.5 billion pounds from private sources to meet new requirements for cash reserves in the U.K. without tapping the government's 37 billion-pound bailout fund. Rivals Royal Bank of Scotland Plc, Lloyds TSB Group Plc and HBOS Plc all plan to sell shares underwritten by the state, which may take stakes in the banks and will restrict executive pay and dividend payouts.

Jonathan Williams, a Singapore-based spokesman at Barclays, declined to comment.

Barclays has sought capital from Russian banks OAO VTB and OAO Sberbank although it's not clear if the approach was successful, the Wall Street Journal reported Oct. 28 without identifying who provided the information.

The Qatar Investment Authority, an existing Barclays shareholder, has been in talks with the bank for ``several weeks,'' the Times reported, without citing anyone. Discussions with the Libyan Investment Authority, VTB and Sberbank haven't led to any investments, the newspaper said.

Barclays agreed to buy collapsed Lehman Brothers Holdings Inc.'s investment-banking and capital-markets operations in the Americas, including its headquarters in New York, for $1.54 billion on Sept. 17.

The bank was last week lowered to ``neutral'' from ``buy'' by UBS AG, which said earnings and dividends at the U.K.'s second-biggest bank may be hurt as it raises capital amid a slowing economy.

Shares in Barclays have declined 40 percent this month.

To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net