Barclays shares up on sale talks

Barclays said any decision would be based on shareholder interests

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".

Shares in Barclays closed up 22.67%, or 16.80 pence, at 90.90p.

Application deadline

The Asset Protection Scheme uses government money to insure banks' riskiest assets against further losses.

ASSET PROTECTION SCHEME Taxpayers underwrite banks' bad debts Essentially an insurance scheme Banks pay a fee to take part Banks are liable for initial losses, similar to paying the excess on an insurance claim

Analysts said Barclays could use the proceeds of any sale of the iShare business to pay the government fees required to join the scheme.

RBS, one of the current participants, paid £6.5bn in exchange for the government insuring its £325bn of toxic assets.

"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.

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.