Barclays are set to raise up to £7.3bn in a proposed deal that will strengthen its balance sheet and maintain the banks independence.
The money will be mainly raised from the state investment funds and royal families of Qatar and Abu Dhabi.
If the deal is completed as expected, the Middle Eastern investors will have an almost 32% stake in Barclays.
Barclays shares initially rose on the news, but later reversed course as investors worried about the cost of the funding. Rumours in the city say the interest rates charged may be up to 14%.
In late morning trade, the shares were down 9.14%, or 18.75p, at 186.5p.
Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family, is investing up to £3.5bn in Barclays.
If the deal is completed as expected, he will end up with a 16.3% stake in the bank.
It is also raising up to £2bn from Qatar Holdings and £300m from Challenger, controlled by Qatar's Royal Family.
That could leave the two Qatari investment vehicles, which already have small holdings in Barclays, with stakes of 6.2% and 2.8% respectively.
Barclays is also seeking to raise an additional £1.5bn from existing institutional investors such as pension funds.
'Independent'
Barclays said the plan allowed the bank to fulfil the capital raising requirements stipulated by the UK government.
"The board believes that this maintains Barclays as a strong, independent and well-capitalised bank," said Marcus Agius, Barclays chairman.
The UK government is to inject up to £37bn of taxpayer cash into Royal Bank of Scotland (RBS) Lloyds TSB and HBOS.
UK Mortgage lender Bradford & Bingley (B&B) is to be nationalised.
