Analysts questions Barclays motives on BGI
UK-based research house Datamonitor has suggested that moves by the Barclays Group to sell off key assets, including Barclays Global Investors (BGI), suggest all is not well within the big banking group.
In a report released by its financial services analyst, Roderick Logan, Datamonitor said while the banking group had reported profits of £826 million in the first quarter and despite trumpeting the impressing results, the move to sell off key assets suggested all was not well.
Logan pointed out that the announcement to sell BGI had come hot on the heels of its decision to sell its exchange traded funds division, iShares and a £7 billion capital raising.
“Given this funding, questions regarding Barclays’ motives remain,” he said.
Logan said there were several possible reasons for the bank to make such moves including raising its core tier one capital ratio and ensuring it did not get involved in the UK Government’s Asset Protection Scheme.
He said as well, the disposal of BGI and iShares represented sound short-term options to allow the bank to boost its capital ratio in case the economic picture deteriorated further.
“However, in the long term, this strategy will seriously diminish Barclays’ future growth prospects, suggesting the Middle East investors may stand to lose out on their investment,” Logan said.
AUTHOR
Mike Taylor
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