Asset management: Barclays disposes of a regulatory headache

When Barclays announced last month that it had agreed to sell its investment manager, BGI, to BlackRock, the net gain on the sale of £5.3 billion closed an intense debate over whether the bank was adequately capitalized. So strong does Barclays now look that some analysts on the call to announce the deal even began to ask whether it is being too cautious and is too strongly capitalized.

You really could not make it up.

So the first words Barclays Capital chief executive Bob Diamond uses to describe the deal to Euromoney come as something of a surprise. "This deal was not about the capital," he says, "although it does benefit our capital." What drove it then? Diamond says it was increasingly worries about related-party regulations that were restricting Barclays Capital, as the investment banking division of a bank that also owns an investment manager, from dealing with...