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Banks in line for $153 mln payday from Barclays share sale

LONDON, July 30 | Tue Jul 30, 2013 8:54am EDT

LONDON, July 30 (Reuters) - The investment banks working on Barclays' multi-billion pound share sale could split a total fee pot of close to 100 million pounds ($153.49 million).

Barclays said on Tuesday it planned to raise 5.8 billion pounds from its shareholders to satisfy Britain's financial regulator's demands for the 320-year-old bank to strengthen its capital reserves.

Buoyant stock markets have helped boost the volume of equity fundraising globally this year, with the amount raised up 36 percent year-on-year in the first six months of 2013.

Total global equity capital markets (ECM) fees have also risen, with banks earning $9.6 billion during the first half of the year, a 26 percent increase on the same period in 2012.

Barclays' rights issue is being underwritten by Bank of America Merrill Lynch, Citi, Credit Suisse and Deutsche Bank, who will reap fees of as much as 1.7 percent of the gross proceeds of around 5.95 billion pounds, according to the underwriting agreement.

That is below the average 2.79 percent paid on rights issues globally so far this year, according to data from Thomson Reuters and Freeman Consulting.

If any extra underwriters or sub-underwriters are added to the deal they will also be paid from this total fee pot of 101.1 million pounds, eating into the commission paid to the top four banks and reducing the risk each takes on.

Also, Barclays will itself receive around 5.95 million pounds for its role as global co-ordinator on the sale.

If the new shares are not admitted to the stock market by Oct. 3, the underwriters may be in line for extra fees.

The share sale would not impact investment banking league tables until it is completed but if it were included today, with credit based on no further underwriters being added, Deutsche Bank would overtake Goldman Sachs to claim the top spot in the Thomson Reuters ECM (Equity Capital Markets) tables for Europe, Middle East and Africa.

 
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