Barclays bank confirmed today that it was planning to raise £4 billion by selling off a part of its fund management capital arm.
Barclays has stoically avoided going down the route of other high street banks such as Lloyds TSB and the Royal Bank of Scotland by avoiding a government bailout.
Rather than look to the government for additional funds, Barclays hopes to sell off approximately 0.5 per cent of its trillion dollar fund management subsidiary. The Barclays portfolio of investments is reportedly worth over £700 billion, and has maintained a steady valuation throughout the economic crisis.
According to The Guardian, businesses backed by Barclays fund management have, “continued to perform well and have has a strong start to 2009.” The positive outcome of its investees was mirrored this morning in the bank’s shares increasing by 14 per cent from last week.
Banks as a collective are making adjustments to counter the effects of the recession, and with a number of large writedowns inevitably looming on the horizon, the banking sector needs available capital to cushion the blow of losses.
Barclays has so far resisted government control by securing billions of pounds worth of investment from private investors from the Arab community in Abu Dhabi and Qatar. Further divestments in the current economic climate are also likely to come from the Middle East, as one of the few cash havens remaining post global recession.
Despite the move to hedge, Barclays remained insistent that they were in a strong position to see their customers through the difficult times ahead, as one of the few banks to post a profit for 2008 of £6 billion.