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Did Barclays Bank make a mistake with the iShares sale?

As the sale of Barclays Bank's iShares division was completed yesterday they were already murmurs of discontent from investors. The business was sold for a credible £2.9 billion, at a time when Barclays Bank requires as much finance as possible, but many believe the business has been sold too cheaply.

It is easy to forget in the current economic downturn that iShares is the world's top provider of exchange traded funds and was valued at a significantly higher figure just a few months ago. However, the sale of the operation needs to be considered against the need for capital and the precarious position of the Barclays Bank balance sheet. The sale has effectively allowed the bank to escape the grasp of the UK government and the added regulatory burden this would have brought about.

However, what appears to have upset analysts and investors more than anything else is the immediate announcement by CVC Capital Partners that the business would be refloated, as a separate entity on the UK stock market, as soon as possible. The purchase by CVC Capital Partners would appear to have been a well-planned "smash and grab" allowing the group to take advantage of the current economic downturn and Barclays Bank's own financial position.

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