Regulator Identifies £3bn Capital Shortfall at Barclays

LONDON -- The shares of Barclays  (LSE: BARC  ) (NYSE: BCS  )  slid 7 pence to 295 pence during early trade this morning after the Prudential Regulatory Authority said it had identified a £3 billion capital shortfall at the bank.

The PRA, which was established this year to regulate the bank sector and is part of the Bank of England, assessed eight major U.K. banks and building societies to ensure they held capital resources representing at least 7% of their risk-weighted assets by the end of 2013.

As at the end of 2012, the PRA calculated risk-weighted assets and capital resources at Barclays were £501 billion and £32 billion respectively, giving a ratio of 6.4%.

The PRA acknowledged the bank's existing plans would produce extra capital of £1.3 billion this year, leaving a further £1.7 billion to be generated.

Barclays said this morning that, based on its own projections, a ratio of 9% could be reached by the end of 2013, with 10.5% attained by the end of 2015. The FTSE 100 member also confirmed its progress was expected to be met without the issue of extra shares.

Other organisations named by the PRA today as carrying a shortfall were Co-operative Bank,Lloyds Banking Group, Nationwide, and Royal Bank of Scotland, with their combined deficit coming in at £27bn.

HSBCStandard Chartered and the U.K. arm of Santander were all deemed to have met the PRA's 7% capital measure.

Of course, whether today's update from the PRA, as well as the wider prospects for the banking sector, still combine to make Barclays shares a buy is something only you can decide.

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