Barclays eyes iShares sale, shares surge
LONDON (Reuters) - British bank Barclays Plc said it is considering selling iShares, part of its fund management arm, and said it was trading strongly, sending its stock up by more than a fifth.
"Barclays ... confirms that it has held discussions with a number of potentially interested parties as part of its practice of regularly reviewing the group's portfolio of businesses," the bank said in a statement on Monday, adding that it had not decided whether to proceed with any disposals.
An exchange-traded funds provider, iShares is worth up to 5 billion pounds ($7 billion), weekend media reports said.
Analysts estimated a valuation nearer 3 billion pounds, which is still more than one third of Barclays' market value.
Barclays had approached a small number of potential buyers, one bank industry source said.
Barclays could use the proceeds of any disposal to cover the cost of joining a government scheme to insure banks against losses on risky assets.
A sale could also remove the need for the bank to sell new shares, or issue them directly to the state, analysts said.
That would enable Barclays to avoid surrendering a stake to the government, in contrast to rivals Royal Bank of Scotland (RBS) and Lloyds Banking Group, who have handed majority control to the state in return for financial assistance.
"If this is the case, they could bullet proof the balance sheet and there'll be no government stake, which is invaluable," said Fox Pitt, Kelton analyst Pawel Uszko.
By 1610 GMT, Barclays shares were up 20.4 percent at 89.1 pence, valuing the bank at about 7.5 billion pounds, and outperforming a 2.4 percent rise by the FTSE 100 share index.
CAPITAL PRESSURE
Barclays confirmed that it was in talks with the government about joining the asset insurance scheme, under which the state insures banks against losses on risky debt-related assets in return for a fee.
The bank said it would decide whether or not to take part based on "the economic merits to shareholders."
Joining the program would strengthen Barclays' capital reserves, which are currently lower than those of rivals who have accepted government money or launched rights issues.
Barclays so far has avoided accepting government help because it feared doing so could compromise its commercial freedom. Continued...
