Barclays confirms BlackRock talks over BGI sale

by Gill Montia

Story link: Barclays confirms BlackRock talks over BGI sale

Barclays has confirmed that it is in discussion with BlackRock about the sale of its iShares and Barclays Global Investors (BGI) businesses.

In April, the bank announced the sale of iShares (part of the BGI asset management division) to CVC Capital Partners, for around $4.4 billion.

However, the group said it would remain open to offers for iShares until mid-June and in May, BC Partners put in a higher bid.

Days later, press reports suggested that the bank could also sell its BGI unit, which is valued at around $12 billion.

Barclays has now confirmed that it has had “discussions with a number of parties, including UK private equity firm, BlackRock, about the sale of both iShares and BGI.

Should a deal be agreed, the bank will have to pay a $175 million break-fee to CVC.

Barclays remains committed to riding out the credit crisis without government support and in March the group emerged from a Financial Services Authority “stress-test” with a clean bill of health.

However, the sale of BGI would bolster its balance sheet which may have to withstand future shocks on impairment charges.

The group posted pre-tax earnings of £1.37 billion in the three months to the end of March, reflecting strong growth at its investment banking unit, which acquired Lehman Brothers’ US investment banking and capital markets businesses last September.

However, impairment charges and other credit provisions increased to £2.31 billion, up from £1.29 billion in the first quarter of 2008 and further writedowns are expected during 2009.