UK's banking giant, Barclays hinted that it is planning to raise billions of pounds from shareholders in order to make a provision for meeting expenses relating to past mis-selling scandals.

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 resultsfor 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.

Payment protection insurance provisions are expected to rise to £800m and the bank will also have to make a large provision against interest rate swap mis-selling claims.