Barclays sells ETF unit iShares to CVC Capital for $4.4 billion

LONDON: Barclays Plc, the UK���s third-largest bank, agreed to sell its iShares unit to CVC Capital Partners for 3 billion pounds ($4.4 billion). London-based Barclays will finance $3.1 billion of the purchase price, the company said in a statement. iShares is the biggest manager of exchange-traded funds.

The sale will boost Barclays���s capital after it shunned the UK���s asset-insurance program to avoid government influence. The Treasury increased its stake in Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc after they received government guarantees. Barclays���s loans passed a stress test by the Financial Services Authority, it said last month.

���The bank will need to do more to increase its capital, with a mixture of further asset sales, buying back its debt, and raising equity,��� said Christopher White, who helps manage 50 billon pounds at Threadneedle Asset Management in London.

Officials at Barclays and CVC declined to comment. Barclays climbed 6.7% to 168.4 pence by 12 pm in London trading.

Barclays is the best-performing UK bank this year, rising 9.7%, compared with a 19% drop for the five-member FTSE 350 Banks Index.





iShares had 226 billion pounds under management on December 31. Exchange-traded funds typically track the performance of indexes such as the Standard & Poor���s 500. The unit is part of San Francisco-based Barclays Global Investors, which had 1.04 trillion pounds of funds under management at the end of 2008.

���They may regret its sale in time as iShares is a fairly stable business and the money may go into businesses that are not so stable or safe,��� said Dave Bradbury, who helps manage $6 billion at Canada Life Ltd in London and doesn���t own the stock. Barclays has said it will use the money raised by selling iShares to bolster its financial strength. The bank���s Tier 1 capital ratio is 6.7%. Lloyds estimates the asset- protection program will increase its core capital ratio to 14.5%, while RBS says its ratio will rise to 12.4%.