March 16, 2009

iShares Unit May Be Sold (March 16, 2009)

Several news sources are reporting that Barclays Plc is in talks to sell its iShares exchange-traded funds unit. The U.K.'s third- biggest bank is trying to bolster capital without turning over a stake to the government, according to Bloomberg.


The iShares unit may be valued at about 2 billion pounds ($2.84 billion) based on its earnings and similar recent deals, analysts estimate.


In January, Barclays said it wouldn't need government funding because of record revenue from Barclays Global Investors and the acquisition of Lehman Brothers Holdings Inc.'s North American unit. On Feb. 9, the bank said second-half profit rose 49 percent to 2.66 billion pounds.


Barclays Tier I capital ratio was 6.7 percent at the end 2008, less than its major rivals in Britain.

Barclays Global Investors had 1.04 trillion pounds ($1.5 trillion) of funds under management at the end of 2008, including 226 billion pounds at iShares.


Analysts estimate that iShares accounted for about 25 percent of BGI's profit last year, or 110 million pounds.

Barclays is expected to ask the British government to guarantee 20 billion to 81 billion pounds of assets, according to analysts surveyed by Bloomberg.

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