(Bloomberg News) Barclays Plc, the U.K.'s second-largest bank by assets, will sell its entire $6.1 billion stake in BlackRock Inc. before the latest round of Basel rules stops it from counting the holding as capital.
BlackRock, the fund manager started by former mortgage-bond trader Laurence Fink, will buy back as much as $1 billion of shares from Barclays as part of the transaction, the London- based bank said in a statement today. The British bank took the 19.6 percent holding when it sold Barclays Global Investors to BlackRock in December 2009 for about $15.2 billion.
The latest rules from the Basel Committee on Banking Supervision will force the lender to set aside capital against the stake to cushion itself against any decline in the value of the holding. BlackRock has slipped 24 percent since the purchase was completed, prompting Barclays to write down the value of its stake in 2011 to about 3.4 billion pounds ($5.3 billion).
"It's a less attractive asset under the Basel III rules," said Ian Gordon, an analyst at Investec in London who rates the bank a buy. "Barclays can remove it from that debate."
Barclays, Morgan Stanley and Bank of America Corp. are selling about 29 million shares to money managers, including the over-allotment option. They expect to set a price for the stock on May 23, according to a term-sheet for the offering.
BlackRock fell 3.1 percent to $166.57 at 9:34 a.m. in New York. The stock was at $227.08 the day before the purchase was completed. Barclays rose 1.5 percent to 178.7 pence as of 2:40 p.m. in London trading today.
A further statement will be issued following the pricing of the offering, Barclays said. A spokesman for the lender in London declined to comment beyond today's statement.
"BlackRock taking $1 billion of this gives Barclays a good anchor investor to start this," said Christopher Wheeler, a London-based analyst at Mediobanca SpA. "What this does for Barclays is get rid of a lot of volatility in this holding."
Regulators are forcing banks to assign higher risk- weightings to shares in financial companies to ensure they are adequately capitalized individually and discourage them from owning one another. By boosting those weightings, regulators can force banks to set aside more capital, reducing profitability.