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Barclay's on Track for Middle East Funds

Shareholders appear ready to approve a cash injection from several Middle Eastern sources.

By the Associated Press  

LONDON -- Shareholders of Barclays , Britain's second largest bank, were on course Monday to vote in favor of a plan to raise 7 billion pounds ($10.5 billion), largely from funds in the Middle East.  

Chairman Marcus Agius told shareholders that the count of proxy votes cast ahead of the meeting indicated that the required majority would be achieved. 

If approved, the deal will see the bank accepting roughly 5.3 billion pounds from a trio of private investors from Qatar and Abu Dhabi, as well as 1.7 billion pounds from other investors. 

The deal had been dogged with controversy since it was originally announced last month. 

Two key shareholder advisory groups suggested the deal had no advantage over a government bailout accepted by three of Barclays' rivals, and some existing investors were angry that they hadn't been given the option to buy all 7 billion pounds of new shares before they were offered to Mideast investors. 

However, last week Barclays appeased shareholders by portioning off 500 million pounds ($749 million) of preference shares off the proposed Mideast investment and offering it to institutional investors. All those shares -- which pay an annual interest rate of 14% for 10 years -- were snapped up in one day. 

Barclays' shares rose 10% to 146 pence ($2.19) by midday on Monday, as uncertainty over the deal vanished and markets welcomed the news the bank would be bolstered by the cash injection. 

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