Daily Finance Update
Fri 12 Jun 2009
Blackrock in £8.2bn Barclays deal
Barclays has agreed to sell its fund management division, Barclays Global Investors (BGI), to US money management firm Blackrock for £8.2bn ($13.5bn).
Blackrock is paying a mixture of cash and shares in a deal that will create the world's biggest asset manager.
The Barclays staff, who own 4.5% of BGI, will share a £365m windfall. Chief executive Bob Diamond will get £16m.
Barclays has shunned government help, choosing to raise money privately, to help it weather the financial crisis.
The buyer is BlackRock of the US, and the deals turns BlackRock into the world's biggest money manager, with a striking £1.9 trillion of funds under management - which is more-or-less the size of the entire hedge fund industry.
Pound hits 2009 high against euro
Sterling has reached its highest level against the euro since the start of the year after data suggested the UK recession may be over.
One pound was worth 1.1756 euros in late trading, having closed the previous day at 1.1672 euros.
On Wednesday the National Institute of Economic and Social Research estimated that the economy grew in April and May
Negative equity among home owners may have exaggerated the speed with which the UK economy fell into recession, the Bank of England says.
Its Quarterly Bulletin says negative equity can undermine the solvency of lenders as well as depressing borrowing and spending by home owners.
Negative equity affects between 700,000 and 1.1m households, the Bank suggests. Negative equity arises when the value of a home falls below the value of the loan used to buy it. But the Bank admits that there is no exact measure of the size of the problem.
Lewis grilled over Merrill deal
Ken Lewis, Bank of America chief executive, came under withering attack in the US Congress on Thursday over the lack of disclosure of information about escalating losses at Merill Lynch before his shareholders voted on acquisition of the investment bank in December.
In a congressional hearing into whether federal regulators exerted undue pressure on Mr Lewis to move forward with BofA’s acquisition of Merrill last year, Mr Lewis reiterated his position that Merrill’s losses became a cause for concern only in mid-December. That was after BofA shareholders voted to approve the deal
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