According to the note, Barclays will have a tier one ratio, a measure core liquid assets, of of 8.7% by 2012. If the "UK finish" is a 10% core tier one, Barclays would be £7bn short of capital.
Let's assume that is true, and wipe £7b off of Barclays to see if it is still a buy.
Its current PBV is 0.64. At a market cap of £31.8b, this gives it a BV of £49.7b (=31.8/0.64). On a worst case so far, the current holders will be diluted to a PBV of 0.78 (= (31.8+7)/49.7). That's obviously a hefty dilution. Now, the median PBV of BARC orver the last 5 years is 1.63 (which, remember, includes some pretty drastic years). Over 10 years, it is 1.93. So, even on a bad turn of events, if BARC was to return to just the median PBV of the last 5 years, we'd expect a fair value over price to be 1.63/0.78 = 2.1. So, we could still see a doubling of the price if BARC returned to a normal valuation, even if we are pessimistic about the dilution.