Barclays is planning to sell its entire stake in BlackRock as part of its provisions to make sure it can comply with the incoming Basel III regulations, it has emerged.
Global banks will be legally required to meet the guidelines laid out in the fresh rules as of the beginning of next year as regulators seek to make sure lenders hold sufficient capital to avoid any repeat of them requiring public bailouts in the future.
This process is likely to involve companies having to restructure their business in order to meet the Tier 1 core capital ratio demands listed in Basel III and Barclays has now decided to get rid of its complete $6.1 billion stake in the fund management firm.
The major British bank took on its 19.6 per cent share in BlackRock in December 2009, but, since that date, the value of this holding has declined by approximately 24 per cent.
With this in mind, Ian Gordon - analyst at Investec - told Bloomberg: "It's a less attractive asset under the Basel III rules. Barclays can remove it from that debate."
By Gary Cooper