BRITISH banking giant Barclays is close to raising £4 billion in a placing with some of the world’s biggest sovereign wealth funds.

The move is the latest in a series of capital raisings around the world by banks that have been hit hard by the credit crisis. Marcus Agius, the bank’s chairman, and his chief executive John Varley are expected to come under pressure tomorrow to clarify the fundraising in a stock-exchange statement.

The confirmation will put an end to the uncertainty surrounding the bank while the City has waited for details of how it will raise new capital.

The placing, to be completed within a fortnight, will involve issuing new shares to investors at a premium to Friday’s closing price of 318p. This valued the bank at £20.9 billion.

The intention is to ensure that the value of shares owned by existing investors in Barclays is not diluted. It is likely they will be offered the chance to buy the same percentage of shares in the placing, but it will be underwritten by the sovereign funds.

It is thought that at least six potential investors are in talks with Barclays and it is likely that three of these interested parties will be selected. The first opportunity is being offered to the China Development Bank and Temasek, a Singaporean government investor. Both of these funds have already bought shares in the British bank at a price far higher than 318p and are sitting on big paper losses.

This will give them an opportunity to buy in at a lower price.

According to an adviser acting for a sovereign wealth fund, all the interested parties are carrying out due diligence and the fundraising could be completed within the next 14 days.

Barclays is the last of the big British banks to raise capital. Royal Bank of Scotland has already raised £12 billion and HBOS, which was formed out of the merger of Halifax and Bank of Scotland, will this week publish its rights issue document to raise £4 billion.

Unlike RBS, Barclays does not require this capital to shore up its balance sheet, and does not intend to cut its dividend, which currently yields 10%. It is thought the bank’s profits are in line with City expectations. However, Barclays does want to increase its core tier-one capital ratio to over 5.25% compared with its present level of 5.1%.

Varley intends to put the money raised into growing the business. In April, at the group’s annual meeting, Frits Seegers, chief executive of Barclays’ global retail and commercial banking division, said the group was “wide open” for new mortgage business at a time when other lenders were reining back because of the credit squeeze.

Barclays is also expanding into new areas such as Pakistan, where it has obtained a licence from the State Bank of Pakistan to open 10 branches. To help this, it has appointed a series of managing directors to spearhead growth in India, the Middle East and north Africa, southern Africa, Russia, Pakistan and east and west Africa.

In the United Arab Emirates, Barclays is the second-largest issuer of credit cards after launching there three months ago.

Barclaycard is stepping up its expansion into America after acquiring Juniper, a card business, nearly four years ago. The bank is now the eleventh-largest issuer of cards in America and the second-largest in South Africa.

Despite the difficulty in the capital markets, the bank’s investment-banking arm, headed by Bob Diamond, has been a strong profit generator.

There is much interest in how Diamond is going to grow the business in America, where he will now spend most of his time. Diamond was one of the main supporters of Boris Johnson in his campaign to be mayor of London, but he does not intend to have any further role with Johnson’s office.

Banking analysts say some of the big investment banks on Wall Street could come back and raise more capital. Just last week Lehman Brothers raised $6 billion (£3 billion) after it reported a $2.8 billion second-quarter loss.

There is also an expectation within banks that there will be a round of consolidation in the industry as the well-capitalised banks buy up those that have been laid low by the credit crunch. This week HBOS is expected to detail the level of asset write-downs from its exposure to the housebuilding and commercial property market. The bank has £3.3 billion of loans outstanding to the British housebuilding sector and a number of equity investments as well. The write-down, which is not expected to be big, will allay City fears that it is overexposed to the sector.

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