Yes, yes, it has been speculated upon before. Repeatedly.
And yes, there has been near-constant chatter recently on which bits of the group Barclays might consider selling in order to bolster its capital base.
Yet sources have told FT Alphaville that Barclays is now in detailed conversations with a consortium buyer to off load Barclays Global Investors, its asset management arm, for around £5bn.
That sounds a lot - certainly compared with Barclays’ total market cap of just over £8bn. But BGI is a big business - one of the largest asset managers in the world, no less, with something close to £1,000bn under management. Having pioneered low-cost index tracking products, recent years have seen a big expansion of its active management business, while the division also includes the fast-growing iShares exchange traded fund business.
A Barclays spokesman issued a curt “no comment” on Thursday.
But usually knowledgeable sources say the bank is studying a plan that would see Barclays itself part-fund the deal.
With an institutional client list that runs to 3,000 names, BGI had total income of £1.84bn last year, producing just under £600m at the pre-tax level - down 19 per cent on 2007’s figures. So, applying a 30 per cent tax rate, a £5bn price tag would suggest p/e multiple of something like 12 times.
The proceeds, of course, would be timely as well as handy - sweeping away those niggling concerns that Barclays might have to return to shareholders again after last autumn’s Middle Eastern cash injection.
Tier 1 capital will be bolstered - and cash will be available if required to fund participation in the UK government’s asset guarantee scheme, which is rumoured to carry a price tag of 3 per cent or more of underwritten assets.
We assume selling BGI would be something of a wrench for Bob Diamond. He is chairman of the division and in the past has enjoyed spectacular rewards from the BGI remuneration scheme. But in the current environment there’s not much room for emotional attachments.
In a generally strong banking sector, shares in Barclays were 6 per cent higher mid-morning in London
This is clearly one to watch.
Related links:
BGI group profile
