UK's banking giant, Barclays has increased the total bill for mis-selling schemes by about £2billion yesterday and has decided to set aside additional funds for the purpose.

The bank has set aside an additional £1.35 billion to settle payment protection insurance scandal and will now pay about £4 billion for PPI in the country. It also increased provision for compensating firms for risky interest rate swap products by another £650million to a total of £1.5 billion. The mvoes comes after the bank decided to raise additional funds form the investors.

The bank is allegedly in talks with investors to launch a £4 billion rights issue for arranging funds for the expenditure. According to estimates, the company might face a capital gap of about £7 billion and is thus looking to raise capital to meet the expenses. The move to raise capital is expected to be officially announced tomorrow when the banking giant announces its financial results for the first half of the year.

Barclays has been holding discussions with the Prudential Regulation Authority to find out ways to meet the new leverage ratio requirement that will make it mandatory for the lenders to hold equity capital equivalent to 3 per cent of their total outstanding loans. The banks were expected to be given a number of years to meet the requirement, but there are indications that the central bank is implementing the rule in a faster pace.