Barclays has announced a £5.8bn rights issue to shore up its capital position as it reports another £2bn in mis-selling charges.
Barclays said the capital raising plans, designed to meet the Prudential Regulation Authority's leverage ratio target of 3% by June 2014, will see it issue stock at 185p per share, a 40% discount to yesterday's closing price.
The bank will also issue £2bn of convertible debt and shrink its balance sheet in a bid to close a funding gap of some £12.8bn, it said.
Barclays shares slumped 5% to 293p this morning as the plans were revealed.
The announcement came as Barclays reported a 17% drop in H1 pre-tax profit to £3.59bn, prompted by £640m in costs as a result of its 'Transform' restructuring programme.
It added that provisions for payment protection insurance (PPI) redress (£1.35bn) and interest rate swap mis-selling (£650m) had risen by a further £2bn, far higher than expected.
That takes total PPI provisions to £4bn and total swaps provisions to over £1bn.
Pre-tax profit within Barclays wealth and investment management business, meanwhile, fell by 53% to £47m as a result of Transform, higher credit impairment charges and a £22m 'customer remediation provision'.
Barclays chair Sir David Walker said the rights issue will allow the bank to increase its dividend payout ratio ahead of original targets.
"The board and I are aware of the implications of a rights issue for shareholders. We hope to balance this with reduced uncertainty in the outlook for Barclays and with enhancement of our dividend payout from 2014," added chief executive Antony Jenkins.
The bank will issue £2bn of 'coco' bonds - debt that converts into equity at times of stress - as part of its capital raising plans.
In a statement, the regulator said it welcomed Barclays' "credible" proposals to bolster capital.
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook