Barclays looks to cash in its iShares chips

Barclays has confirmed it has held discussions with a number of potential buyers over the sale of its profitable exchange-traded funds business, iShares, but says no decision regarding the sale of any assets has been made.

The bank is mulling the sale as a way to boost its capital position as it contemplates joining the UK Treasury’s asset protection program.

The program has so far seen Royal Bank of Scotland and Lloyds Banking Group hand over significant stakes to the UK Government in exchange for state insurance against loss-making assets.

Barclays said the discussions were part of the bank’s practice of “regularly reviewing the group’s portfolio of businesses”.

“Barclays businesses continue to perform well and have had a strong start to 2009,” the bank said in a statement.

The bank also confirmed that it was in talks with Treasury and the UK’s Financial Services Authority regarding its potential participation in the Government’s insurance scheme.

Barclays said its decision whether to participate in the scheme, and to what extent, would be based on the “economic merits” to shareholders of doing so.

ETFs were about the only product to see net inflows in 2008, according to Barclays’ ETF and ETP Industry Review for year-end 2008.

Figures from Strategic Insight show global net sales of ETFs during the first 10 month of last year totalled $US187.5 billion, compared to net sales of minus $US256.7 billion for mutual funds. It is understood iShares enjoyed a net inflow of about $90 billion in total last year.

At the end of 2008, the global ETF industry had 1590 ETFs with 2658 listings, assets of $711 billion, from 85 providers on 42 exchanges around the world.

The number of ETFs increased by 36 per cent last year, with 472 new ETFs launched.

iShares is based in San Francisco and is part of Barclays Global Investors (BGI), one of the world’s largest institutional managers with more than $US1.9 trillion in assets under management (at June 2008).