Concerns raised over Barclays cash plans

Barclays’ plans to tap Middle Eastern investors for a multi-billion boost came under mounting pressure today as a major shareholder group raised concerns over the deal.

The Association of British Insurers (ABI) – which represents around a fifth of UK shareholders – confirmed it had slapped a provisional “amber” top warning on the deal as investor worries grow.

Institutional investors, such as Legal & General, are said to have been putting pressure on Barclays to change the terms of its deal after being left angry at the cost involved and lack of greater opportunity to participate,

But the Gulf investors have reportedly refused to budge on terms, which leaves Barclays shareholders with a difficult decision when they have to vote on the deal on November 24.

The ABI said today it was yet to finalise its “amber” rating, which is pending as it holds further meetings today.

Barclays announced the scheme to raise funds through Middle East investors at the end of last month as it sought to avoid part-nationalisation under the British government’s scheme.

It is bringing on board Manchester City owner Sheikh Mansour Bin Zayed Al Nahyan – a member of Abu Dhabi’s royal family – and gaining additional support from the Qatari Investment Authority and Challenger, which represents Qatar’s royal family.

Barclays is raising £7.05bn (€8.1bn), which includes £1.25bn (€1.45bn) from existing and new institutional shareholders.

It is understood that existing Barclays shareholders also wanted to be offered the chance to have first refusal on a further chunk of the fund-raising.

The deal with the Middle Eastern investors will see them own almost one third of the bank.

But there are now fears that if investors do not support the move they could put Barclays’ future under threat, with no guarantee of British government support if it falls through.