Barclays, iShares, and Selling the Crown Jewels (BCS)

Barclays plc (NYSE: BCS) is trading higher on word that it may sell off its valuable iShares unit.  This is the golden child of the ETF industry.   The reports from the WSJ note that discussions have been held with multiple parties.  While no determination has been made yet, the figure being thrown around is 4 billion British pounds (over $5.6 billion U.S. dollars).  This may offer independent survival, but this looks like it would be no different than pawning off the Crown Jewels.

Barclay’s wants to avoid being owned or at least being controlled by the UK government via bailouts.  iShares is the most valuable ETF franchise in the world with major ETFs  that track global equities, domestic equities, specific stock sectors, real estate, fixed income, commodities, and even specialized targets.

But there is a downside here too.  This is no different than having to sell off Park Place and Boardwalk to avoid going bankrupt.  It can work, but selling off the best assets to pay for survival does not inspire confidence.

Barclays has also said that 2009 is off to a strong start.

Barclays shares are up 13% at $5.01 shortly after the open.

JON C. OGG