Friday, May 15, 2009

Barclays’ Diamond May Receive About $15.7 Million on BGI Sale

Barclays Plc President Robert Diamond may receive as much as $15.7 million from the sale of Barclays Global Investors, depending on taxes and transaction costs.

Diamond holds shares and options in BGI, according to the bank’s annual report. Barclays is in talks to sell the asset management unit to potential buyers, including Bank of New York Mellon Corp. and BlackRock Inc., according to people with knowledge of the matter. The unit is worth about $10 billion, according to Simon Willis, an analyst at NCB Group in London.

The 57-year-old Diamond would receive a cash dividend of $6.9 million were the bank to conclude a deal to sell BGI’s iShares business for $4.4 billion, London-based Barclays said in an April 9 statement. Based on that valuation, his holdings would be worth about $15.7 million in a $10 billion deal. Taxes and transaction costs would eat into any payout.

Diamond, who heads BGI and Barclays Capital, waived his bonus last year in the face of public anger over bankers’ pay. He received 250,000 pounds ($380,000) in salary, compared with 21.2 million pounds of total compensation in 2007.

Alistair Smith, a spokesman for Barclays, declined to comment on any payment Diamond would receive from the sale of BGI. Diamond didn’t respond to a request for an interview made through Barclays Capital’s public information department.

Overall, Barclays employees own about 4.5 percent of BGI, with options to increase their holdings to 10.3 percent, according to the bank’s annual report.

‘Unsolicited Interest’

Barclays, which has avoided government control, is seeking to boost capital to cushion against rising credit losses and writedowns. While the bank has passed a regulatory stress test, its capital adequacy ratios trail those of government-controlled Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc.

Barclays said yesterday it had received “unsolicited interest” in BGI, as well as inquiries about iShares, since the original deal was announced. There is “no certainty” the discussions will result in a deal, the company said in a statement, without naming the potential bidders.

New York-based BlackRock and BNY Mellon declined to comment on any talks.