Barclays finally agrees to sell off iShares division
Barclays, who has continually resisted calls for taxpayer cash injections, is going to keep hold of 20 percent of its stake in iShares, although a deal will be finalised within the next few weeks as selling off the asset management business in needed.
It is being sold off to the private equity firm, CVC Capital Partners, for £3bn. However, Barclays is providing £2.1bn of financing as part of a loan to broker the deal.
Following the announcement Barclays shares rebounded 10 percent.
iShares is part of Barclays Global Investors, which manages more than $1 trillion for investors around the world.
Barclays’ President, Bob Diamond, said that the iShares business has undergone rapid growth over the last few years and as a result is going to be able to grow as a stand-alone business.
The iShares funds have proved an instant hit in the US, although there is still room for growth in the UK and, as a result, with the stake held, Barclays shareholders will benefit from the capital base improvement as well as the ongoing relationship and expansion of iShares.
Unlike other high street banks who have signed up to the Government’s Asset Protection Scheme, Barclays have chosen to raise money privately.
Similarly, unlike many rival high street banks Barclays reported profits of £6.08bn for 2008.