SMBC to buy 2% stake in Barclays for 500 million pounds

TOKYO, June 26 Kyodo - Sumitomo Mitsui Banking Corp. said Wednesday it will acquire a 2 percent stake in Barclays Plc for around 500 million pounds (about $985 million).

The major Japanese and British banks have reached an agreement on the purchase
of new Barclays shares, to be issued in early July, by the core banking arm of
Sumitomo Mitsui Financial Group Inc.

The British bank said it will raise a total of 4.5 billion pounds from
investors including SMBC, the Qatar Investment Authority sovereign wealth fund
and China Development Bank, one of Barclays' largest shareholders.

QIA has agreed to invest up to 1,764 million pounds and the Chinese bank, up to
136 million pounds, according to Barclays.

''Through our capital raising today we strengthen our capital base and give
ourselves additional resources to pursue our strategy of growth through
earnings diversification,'' Barclays Chief Executive John Varley said in a
statement.

Barclays has logged around $5 billion in write-downs on a range of assets,
including those linked to U.S. subprime mortgages.

The British bank and SMBC have also agreed to form a business tie-up and will
start discussing concrete plans for it, the Japanese bank said.

SMBC said that its participation in Barclays' plan to raise capital had come up
in discussions since January on the tie-up.

SMBC will be the second Japanese bank to come to the rescue of European or U.S.
financial institutions hit hard by the U.S. subprime mortgage crisis.

In January, Mizuho Corporate Bank funneled $1.2 billion into the capital base
of Merrill Lynch & Co. at the request of the major U.S. brokerage, which has
taken a beating from the subprime turmoil.