Whilst the management team at Barclays Plc continue to vehemently deny reports that they are very interested in offloading their fund management division, San Francisco-based iShares,  the signs are that a deal is in the offing. The anxiety on the part of Barclays to rush the deal through is apparently due to last ditch efforts to raise capital to avoid needing to participate in the UK's government's toxic loan insurance scheme.

Rumour has it that Barclays have begun talks with financial institutions as well as private equity investors  in the United States who may be interested in buying iShares, who operate  in exchange-traded funding.

Turnover in their iShares division accounts for around twenty five percent of the total of $1 trillion in fund management business handled by Barclays Global Investments. Despite the downturn, investors continue to place a lot of their faith in these funds, which handle corporate U.S. stocks bonds, commodities and real estate. Barclays turned over more than$56 billion in new assets during 2008. 

Any sale of its iShares business could be conservatively estimated to rise up to 5 billion pounds for the bank, allowing them to take a considerable step forward in blocking the government's intention to take a share in the bank.

Analysts have been expecting Barclays to attempt to raise capital through the by selling of off assets to shore up their capital base to maintain commercial independence.  It is reckoned that the bank is capable of absorbing up to £17 billion in future losses before it would need to raise new capital. 

Speculation has it that Barclays's are singularly disinterested in participating in the UK Treasury's asset protection scheme (APS), as it will severely dilute their share value.  APS, designed to limit the losses banks are liable to face on taking on corporate loans and mortgages, which have in the recent past has been very bad for the banks. The government's aim in establishing the APS scheme was to allow the banks to circulate more money in the economy, by removing the risks that they could incur if debts turn sour.

Till now, Barclays have resisted the challenge to come under government control, largely due to the backing of foreign investors, situated in the Middle and Far East. Sale of iShares is likely to continue to bolster Barclay's fight for independence by freeing up some much needed capital to pay the APS's outstanding fees.

Shares in Barclays rose by almost a quarter in value ( up 23 pence to 91) on confirmation that it was looking to sell its IShares business.