CDB set to shore up bond with Barclays

Source: Agencies  |   2008-6-26  |     NEWSPAPER EDITION

CHINA Development Bank confirmed yesterday its participation in Barclays' plan to raise capital.

A CDB official said the decision was aimed at consolidating the bank's position as Barclays' biggest shareholder and showing its confidence in the UK bank's strategy and prospects.

He said CDB and Barclays had cooperated in various fields since signing a stake-purchase agreement and a cooperation memorandum last year. The strategic relationship had strengthened CDB's confidence in Barclays' long-term value.

He applauded Barclays' management and recognized its achievements, adding CDB would continue strategic cooperation with Barclays.

Barclays announced yesterday it would raise about 4.5 billion pounds (US$2.28 billion) through the issue of 1.58 billion new ordinary shares.

The issue would further Barclays' existing relationships with a number of its largest shareholders, including CDB and Temasek Holdings, the bank said.

CDB, founded in 1994, serves as a policy bank under the direct jurisdiction of the State Council. It has 32 branches and four representative offices across the country.

Barclays needs to bolster depleted capital and increase consumer lending in Asia and investment banking in the US. It rose as much as 8.1 percent in London trading yesterday, the biggest gain in five years.

Chief Executive Officer John Varley said he will use half the proceeds to lift the bank's so-called core Tier 1 capital ratio above its 5.25 percent target and the rest for "business opportunities," including possible acquisitions.