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Barclays in Treasury debt talks Barclays shares up on sale talks
(about 3 hours later)
Barclays has said it is in talks with the Treasury over its "potential" participation in the government's Asset Protection Scheme. Shares in Barclays have rallied 22% after it confirmed it is in talks over the possible sale of its iShares fund management business.
The bank said it had held discussions with "potentially interested parties", but no decision had yet been made.
Reports have suggested that Barclays could sell the unit for up to £5bn.
Barclays also confirmed it was talking to the Treasury over its "potential" participation in the government's Asset Protection Scheme.
The bank said any decision on whether it would participate, "and to what extent", would be based on "the economic merits to shareholders".The bank said any decision on whether it would participate, "and to what extent", would be based on "the economic merits to shareholders".
Shares in Barclays were up 22% or 16 pence to 90.1p in late morning trading on Monday.
Application deadline
The Asset Protection Scheme uses government money to insure banks' riskiest assets against further losses.The Asset Protection Scheme uses government money to insure banks' riskiest assets against further losses.
Lloyds Banking Group and RBS are already signed up to the scheme.
In exchange for gaining the insurance, they pay the government a fee.
The government currently insures £325bn of toxic assets at RBS, and £260bn at Lloyds.
Other banks have until 31 March to join.
Chancellor Alistair Darling hopes the Asset Protection Scheme will help restore confidence in the banking sector.
Sale talks
Barclays also confirmed on Monday that it had held talks over the potential sale of its iShares fund management business, but that no decision had been made.
ASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take partBanks are liable for initial losses, similar to paying the excess on an insurance claimASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debtsEssentially an insurance schemeBanks pay a fee to take partBanks are liable for initial losses, similar to paying the excess on an insurance claim
"Barclays...confirms that it has held discussions with a number of potentially interested parties as part of its practice of regularly reviewing the group's portfolio of businesses," it said. Analysts said Barclays could use the proceeds of any sale of the iShare business to pay the government fees required to join the scheme.
Reports have suggested any sale could raise up to £5bn. RBS, one of the current participants, paid £6.5bn in exchange for the government insuring its £325bn of toxic assets.
Following the two announcements, shares in Barclays were up 11% or 8.5 pence to 82.6p. "If they [Barclays] get a reasonable sum, say north of £3bn, they could probably participate in the asset protection scheme without raising more capital," said NCB Stockbrokers analyst Simon Willis.
The government currently also insures £260bn of Lloyds Banking Group's toxic assets, and other banks have until 31 March to join.
Chancellor Alistair Darling hopes the Asset Protection Scheme will help restore confidence in the banking sector.
Profitable business
Unlike Lloyds and the RBS, Barclays has stayed profitable amid the collapse of the financial markets.Unlike Lloyds and the RBS, Barclays has stayed profitable amid the collapse of the financial markets.
The bank reported profits before tax of £6.08bn for the full year of 2008.The bank reported profits before tax of £6.08bn for the full year of 2008.
Last October, Barclays announced a proposal to raise up to £7.3bn to strengthen its balance sheet, mainly from the state investment funds and the royal families of Qatar and Abu Dhabi.Last October, Barclays announced a proposal to raise up to £7.3bn to strengthen its balance sheet, mainly from the state investment funds and the royal families of Qatar and Abu Dhabi.