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Barclays could sell iShares to raise £5billion and avoid Asset Protection Scheme

16 March 2009 / by Rachael Stiles
Barclays is considering the sale of its iShares business as it continues to seek an alternative to participating in the Government's Asset Protection Scheme.

While Barclays has confirmed that it is in talks with the Treasury over its "potential participation" in the scheme, it is still striving to find an alternative to taking Government money.

In response to media speculation over the sale of iShares – its fund management operation– Barclays has said that it has been holding discussions with "a number of potentially interested parties."

The statement continued to say that no decision has yet been made regarding the disposal of any of the bank's businesses.

The sale of iShares would reportedly generate as much as £5billion for the bank which is struggling to weather the economic climate without relinquishing any stake to the Government.

The Asset Protection Scheme is a Government initiative which uses taxpayers' money to insure banks' riskiest assets in order to protect them against further losses and free up their capital, allowing them to regain some stability and resume lending.

RBS and Lloyds Banking Group have already had toxic assets insured under the scheme, £325billion and £260billion respectively.

Along with the other banks, Barclays is mulling over "whether and to what extent to participate in the scheme." They have until March 31 to decide.

Its participation in the scheme will be "based on the economic merits to shareholders of any such participation," Barclays said. It has thus far avoided accepting help from the Treasury by accepting a £7billion investment from its Middle Eastern shareholders last October.

Unlike the other banks which have already taken part in the scheme, Barclays has managed to remain profitable through the credit crisis amid the collapse of other banks; it announced profits of £6.08billion for 2008, and said in its statement that its businesses "continue to perform well and have had a strong start to 2009."

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