Chapter 668 BGI

In fact, not only for Britain, but also for the current EU, the best strategy is to be close to the United States politically, cooperate with China economically, and trade with Russia in energy.

This strategy can maintain its relative independence and not become a vassal of one party.

Of course, this is only the most ideal state. Obviously, this is not what America expects - America's expectation is to cut off Europe's economic exchanges with China and make Europe confront Russia, so that it will always be a vassal of America, and... a blood bag.

What Barron is trying to do now is to try his best to protect Britain's interests in this process.

After all, he doesn't think that even if he is a reborn person, he can stop this process with his power.

Britain is no longer the empire on which the sun never sets...

After meeting with Darling, the Treasury, Barron went to meet Davis of Standard Chartered-Merrill Lynch - he has been in frequent contact with Robert Diamond, chairman of Barclays Bank recently.

What they talked about was not LIBOR, but the acquisition of BGI under Barclays Group.

Barclays Global Investors (BGI) is the asset management division of Barclays Bank, which currently manages approximately $1.04 trillion in assets.

As early as late last month, there was news that Barclays Bank was interested in selling BGI...

The reason for this is naturally that Barclays Bank's management wants to meet the British government's requirement that the Bank of England's capital adequacy ratio reach 8%.

Although Barclays Bank had raised funds and sold its Barclays Africa Group and other businesses before this, the funds obtained, after filling the gap, still have not met this requirement...

One of the main reasons is that Barclays Bank bought Lehman Brothers' equity and corporate financing business for $1.75 billion last year, becoming one of the world's top five investment banks - but its book assets also quickly increased to 2 trillion pounds, requiring more capital.

The Financial Services Authority believes that Barclays Bank overvalues ​​its financial assets and requires an increase in capital and a reduction in the ratio of capital to bonds.

Although the British government is willing to provide funds for Barclays Bank, Barclays Bank, or to be frank, Barclays Bank's management, can be said to be afraid of it - because after the British government rescues Barclays Bank, it will inevitably limit the remuneration of bank executives.

Therefore, Barclays Bank has been raising the required funds through financing and selling its own assets. According to estimates by relevant institutions, the sale of BGI will bring Barclays Bank more than US$10 billion in funds. After obtaining these funds, Barclays Bank's Tier 1 core capital adequacy ratio will exceed 8%, thus meeting the requirements of the British government.

And what Standard Chartered Merrill Lynch values ​​in acquiring Barclays Global Investments (BGI) is that BGI has the high-quality brand of iShares, an ETF business.

ETFs began as public fund products developed for small and medium-sized investors, tracking index investments on stock exchanges, with the advantages of low fees and liquidity.

At present, in addition to Standard Chartered Merrill Lynch, CVC Capital, Blackstone Fund and BlackRock Group are also interested in BGI under Barclays Bank.

Barron knew that in his previous life, it was BlackRock Group that "risked" the acquisition of BGI, which was a rare successful example in the history of world acquisitions.

Yes, in the original time and space, BlackRock Group's acquisition of BGI under Barclays Bank was a very risky act, because at that time, this acquisition could be said to have mobilized all the funds that Larry Fink could raise, and it should be noted that at this time, the operation of ETFs violated the US Securities Exchange Act!

Therefore, each ETF needs to be exempted by the Securities and Exchange Commission before it can start fundraising and operation.

If the US Securities and Exchange Commission no longer issues exemptions and withdraws the exemptions that have been issued, ETFs will be doomed, and BlackRock Group will also lose everything.

But after BlackRock Group acquired BGI, it happened to catch up with the Fed's quantitative easing policy, and ETFs took advantage of this "east wind" to go with the trend.

After that, global ETF assets continued to rise, from US$1 trillion in 2009 to US$5.4 trillion ten years later.

Under this trend, BlackRock's ETF business has also risen. In 2009, when BlackRock acquired BGI, iShares' assets were $300 billion. Ten years later, they increased to nearly $2 trillion.

It can be said that if the Fed had not continued to implement quantitative easing policies and provided cheap money, ETFs would never have developed so rapidly.

Cheap funds provide a lot of idle money to invest in the stock market, driving stock prices up all the way.

The stock market has less volatility, so there are fewer opportunities for shorting and long positions, and ETFs have market makers, providing continuous arbitrage opportunities.

Since they can see this, Standard Chartered-Merrill Lynch naturally has plans to enter the ETF market in a big way. This time, by acquiring BGI, it is enough to expand the business of its investment department again, and at the same time, it can also suppress the development of BlackRock to some extent.

Although DS Group also holds shares in BlackRock Group, it only accounts for a small amount after all, which is far less exciting than Standard Chartered-Merrill Lynch, the "son" of DS Group, to obtain these benefits.

Therefore, Standard Chartered-Merrill Lynch proposed to Barclays Bank a plan to acquire Barclays Global Investors (BGI) for US$10 billion in cash and US$3.5 billion worth of stocks, for a total value of US$13.5 billion.

This price can be said to be the highest among the companies currently participating in the bid for BGI. At least judging from the attitude of Barclays Bank management, they are still very positive about this plan.

“Among the current institutions, CVC Capital is only willing to buy BGI’s ETF fund iShare. Among the two, Blackstone Fund and BlackRock Group, BlackRock Group has a more positive attitude, but it still lags behind in terms of bid. We and they can only come up with less than $5 billion in cash, and the rest needs to be acquired in the form of stocks..."

Davis told Barron:

"But it's clear that Barclays needs cash more, so BlackRock is far less competitive than us in this regard."

Barron's is also aware of this matter, because just last week, Larry Fink, chairman of BlackRock Group, called him, hoping to issue corporate bonds to get some money from Barron's. Get some funding...

It is impossible for Larry Fink not to know that Barron is the majority shareholder of Standard Chartered Merrill Lynch, but in this case, he even opened his mouth to Barron, which also shows that he did not let go of any possible opportunity to raise funds.

Of course, the result was no surprise. Barron declined Larry Fink’s proposal.

To be honest, if he was planning to raise funds by issuing additional shares to Barron's, maybe he would consider it...