Barclays 2013 Annual Report Download - page 61

Governance in action
Deciding to raise equity capital via a fully underwritten rights issue
A significant event for the Board in 2013 was the decision to raise equity capital via a rights issue. Once the PRA had introduced a 3% leverage
ratio expectation and had requested that Barclays meet that expectation by 30 June 2014, a number of Board meetings were held over a short
space of time in order to discuss a range of potential options presented by management that aimed to reduce leverage. The Board examined
these options and considered their potential impact on Barclays’ business model, customers and clients, shareholders and the wider UK
economy, as well as the likely views of the PRA, before deciding on a course of action.
The timeline below illustrates how the Board committed the time to discuss collectively this significant development; when information flowed
up to the Board to enable it to evaluate the potential options for achieving the leverage ratio; how the Board came to agreement on the plan
and supported management in its execution; and how the Board satisfied itself, to the best of its members’ knowledge and belief, as to the
adequacy of the disclosures made by Barclays. In addition to the formal Board meetings, as Chairman I kept in close contact with Board
members to ensure that they were kept informed of progress.
The Board was acutely aware of the importance of taking all reasonable care to ensure that the rights issue prospectus disclosed all matters
that a potential purchaser of Barclays’ shares might be reasonably expected to find relevant. To support the Board, Christopher Saul of
solicitors Slaughter and May, was appointed as an additional independent adviser to provide guidance on matters relating to Barclays, its
business or the business environment more generally that, in his experience and having regard to capital markets practice, the Board should
particularly take into account in approving the prospectus and any areas or matters in the prospectus on which the Board should particularly
focus to satisfy itself as to the adequacy of disclosure. Christopher Saul held a number of meetings with various individual Directors and senior
executives in advance of presenting to the Board on his assessment of the processes followed to prepare the prospectus, the issues likely to be
of key interest to investors in choosing to take up their rights and how those issues were covered in the prospectus, in particular the disclosure
of risk factors and dividend policy. This was in addition to the usual diligence and verification processes and advice received from the Group’s
existing legal and other advisers and internal teams.
The rights issue was launched in mid-September 2013 and closed in early October 2013, with acceptances representing 94.63% of the new
shares offered to shareholders.
June July August September
Mid June: Board debated
indications from the PRA of the
capital, liquidity and leverage
expectations it had of Barclays,
following its assessment of
major UK banks and building
societies, and the initial potential
options and timetable for
meeting those expectations.
Mid July: Given subsequent
discussions with the PRA, the
Board examined a range of options
presented by the Group Executive
Committee for achieving the
leverage ratio by 30 June 2014.
Throughout: discussions
between various individual Board
Directors and senior executives
and Christopher Saul;
opportunity for Board Directors
to review iterations of the draft
rights issue prospectus.
Early Sept: Board examined the
disclosures in the draft rights
issue prospectus, with the
benefit of advice from
Christopher Saul.
Mid June: Board undertook a
preliminary evaluation of the
range of initial potential options
for achieving the expected
leverage ratio, including
assessing the likely impact on
Barclays’ business model,
customers and clients and the
wider economy and possible
shareholder reaction to the PRA’s
expected announcement.
Late July: Board evaluated the
components of a plan (the Leverage
Plan), which included a potential
rights issue. The Board approved a
rights issue in principle and
established and delegated authority
to a Rights Issue Committee,
comprising five Directors, including
the Chairman, Deputy Chairman
and Group Chief Executive, to give
final approval and finalise the terms.
Mid Sept: Rights Issue
Committee approved the rights
issue documents.
20 June: PRA announcement
regarding UK banks’ capital and
Barclays’ initial public response
to the new 3% leverage ratio
expectation.
Late July: Rights Issue Committee
approved the decision to launch a
rights issue.
16 Sept: Rights issue launched.
30 July: Barclays announced its
intention to raise approximately
£5.8bn via a fully underwritten
rights issue, as part of the Leverage
Plan. The PRA announced that,
based on Barclays’ projections, the
Leverage Plan was a credible plan
to meet the target.
barclays.com/annualreport Barclays PLC Annual Report 2013 59
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