Barclays In Talks With BlackRock To Sell Off Barclays Global Investors

Barclays are continuing their run of asset-shedding, with the confirmation this morning that they’re in advanced talks with BlackRock to sell their asset-management arm Barclays Global Investors (BGI), after the rumours flying around last week. This is a big deal – the company has over a trillion dollars under management across 15 countries, and they want $12bn for it.

We’ve been following the iShares sale for a while, iShares being the exchange-traded funds bit of BGI. They ended up selling it to CVC for $4.4bn, though they’ve since been courting higher offers from the likes of Vanguard; they can go with someone else other than CVC if they get a better price before June 18, but would have to pay them $175m to say sorry for ditching them. Though Barclays denied it, the sale of iShares is a crucial bit of capital generation that will keep the bank out of the clutches of the Treasury’s asset-insurance scheme.

But if BlackRock buy BGI, they’ll be getting iShares and a whole lot more, while it would thoroughly buffer Barclays against any bad assets on its books. BlackRock would meanwhile become the world’s biggest money manager, with nearly $3tn under management. But Barclays has been keen to stress this morning that this thing is far from signed off – another party, thought to be Bank of New York Mellon, is also in talks about buying BGI.

For Bob Diamond, Barclays’ chairman and president, this is a win-win situation – his bank gets shored up against potential losses, and he doesn’t care that the brand is pegged back with the loss of a prized asset, because he’d go onto the board at BlackRock if the deal goes through. And if he sells all his stock in BGI, he’ll make about $24m. That’s not going to be very good for morale at the bank, where staff saw their final-salary pension schemes disappear last week.

This deal is going to drag on all week and potentially right to the June 16 wire, and we’ll be keeping an eye on it.

Posted by Ben Beaumont-Thomas in Hot Money | June 8, 2009 12:32PM |