Barclays ditches £3.8bn stake in Blackrock

Barclays said the asset management firm has agreed to repurchase £632m worth of the 19.6 per cent stake which the bank holds, while the remainder will be listed on a stock exchange, with pricing to be confirmed.

The move comes after Barclays faced steep criticism over its return on equity, which fell to 6.6 per cent in 2011, from 6.8 per cent the previous year, and well below its 13 per cent target.

Barclays, which has 3,000 employees in Yorkshire, is also preparing to meet the impact of new regulation, which requires the bank to increase cash reserves to protect against potential future financial crises.

Barclays is expected to sell the stake at a discount to the market price, but it should see a small book gain.

Chief executive Bob Diamond, who is expected to relinquish his position on Blackrock’s board after the sale completes, admitted his bank’s return on equity in 2011 was unacceptable and has warned the 13 per cent target may not be achieved as hoped in 2013.

The scale of investor fury was underlined at the bank’s annual meeting where nearly a third of shareholder votes failed to back its bumper pay awards.

Some 32 per cent of investors voted against or withheld votes for the bank’s pay report, while 24 per cent failed to back the re-election of remuneration committee chairman Alison Carnwath.

Barclays picked up its stake in Blackrock, which holds assets under management worth £2.3 trillion, when it sold Barclays Global Investors to the asset management company in June 2009.

Blackrock is Morrisons’ biggest shareholder with a 10.6 per cent stake in the company.