Barclays is exploring whether its Gulf investors might be prepared to accept a watering down of the terms of their £6 billion infusion to quell a growing revolt by existing shareholders.

A rebellion led by Legal & General and Aviva was gathering pace on Wednesday, with two other big institutional investors contacted by The Times furious with the bank and pushing for better terms.

“They've really got to improve what they've put in front of shareholders,” one top ten shareholder said. “Such strong feeling has been aroused by this.”

Another institutional investor said: “I'd love things to be changed. It [the deal as presently structured] is so dilutive and so punitive.” However, he recognised that it would be very difficult for Barclays to renegotiate a deal already agreed.

The bank is in a delicate position, having signed a binding agreement two weeks ago with its three rescue investors — Qatar Holding, Challenger Universal and Sheikh Mansour Bin Zayed al-Nahyan. However, the threat of a veto by shareholders, who are due to vote on the deal on November 24, could persuade them to yield and accept inferior terms.

Only if they voluntarily choose to do so can Barclays rewrite the deal, which has infuriated its existing shareholders because the normal tradition of giving them first refusal in any capital-raising has been waived.

Instead, the Gulf investors are being offered £3 billion of Reserve Capital Instruments (RCIs) paying a generous interest rate of 14 per cent for ten years. They have also agreed to buy £3 billion of Mandatorily Convertible Notes, which carry valuable warrants giving the right to buy Barclays shares at cut-price rates.

The new investors ultimately could end up owning 32 per cent of Barclays — a substantial dilution of the existing shareholders, who include about a million small investors.

One possibility being explored is that the Gulf investors could be asked to give up their rights to some of the RCIs and allow them to be offered instead to existing shareholders. Yet when the original deal was being negotiated, the investors were reluctant to allow any such “clawback” clause into the contract.

Qatar Holding, the sovereign wealth fund of the State of Qatar, and Challenger, the private family investment vehicle of the Qatari Prime Minister, are already looking at heavy losses from a previous investment in Barclays and are thought to be in no mood to make any concessions.

Barclays, which is on a roadshow of investors this week to try to sell the merits of the capital-raising, is due to meet the powerful investment committee of the Association of British Insurers on Friday.

Time is running out for any deal to be rejigged. The circular has already been mailed and there is little time for any major amendments before the November 24 vote.

One source said that Barclays was “in listening mode” but might be powerless to do much if the Gulf investors dug in their heels.

Apart from subjecting the RCIs to a clawback arrangement, there are other ways that Barclays could adjust the deal more in favour of existing shareholders, including changing the interest rate or duration of the RCIs or altering the strike price at which the warrants are exercised. The £300 million of fees being paid to the investors and their advisers could be reduced.

If the revolt were to lead to a veto, Barclays would probably be obliged to return to the Government for a capital injection. It would also still have to pay the £300 million of fees and its top executives would be unlikely to survive such an expensive U-turn.

It is understood that if it did return to the Government, the original terms would no longer be on offer. All the banks were given the chance of selling preference shares to the government paying a coupon of 12 per cent and of getting a rights issue of ordinary shares underwritten at an 8.5 per cent discount to the prevailing share price.

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