Barclays 2009 Annual Report Download - page 253

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 251
38 Disposal of subsidiaries
During the year, the Group disposed of Barclays Global Investors (BGI), 50% of Barclays Vida y Pensiones Compañía de Seguros and 7% of the GRCB –
Emerging Markets Botswana business.
BGI Other Total
2009 2009 2009
£m £m £m
Consideration received including hedging gains:
Cash receiveda4,207 158 4,365
Non-cash consideration 5,294 118 5,412
Total consideration received 9,501 276 9,777
Assets and liabilities disposed of:
Assets
Cash and balances at central banks 667 – 667
Financial assets designated at fair value:
– held on own account – 393 393
– held in respect of linked liabilities to customers under investment contracts 71,791 – 71,791
Derivative financial instruments –55
Loans and advances to customers –44
Available for sale investments 55 788 843
Other assets 398 204 602
Goodwill and Intangible assets 1,586 – 1,586
Property, plant and equipment 122 – 122
Deferred tax assets 99 – 99
Total 74,718 1,394 76,112
Liabilities
Customer accounts – (368) (368)
Liabilities to customers under investment contracts (71,791) (415) (72,206)
Derivative financial instruments – (8) (8)
Other liabilities (911) (74) (985)
Current tax liabilities 35 – 35
Insurance contract liabilities, including unit-linked liabilities – (354) (354)
Deferred tax liabilities – (16) (16)
Total (72,667) (1,235) (73,902)
Net assets disposed of 2,051 159 2,210
Group share of net assets disposed of 2,051 82 2,133
Transaction costs (539) (10) (549)
Amounts relating to non-controlling interests (580) – (580)
Gain on sale before tax 6,331 184 6,515
Tax (43) (28) (71)
Gain on sale, net of tax 6,288 156 6,444
On 1st December 2009 the Group completed the sale of BGI to BlackRock, Inc. (BlackRock) recognising a profit on disposal before tax of £6,331m. The tax
charge of £43m reflects the application of UK substantial shareholdings relief in accordance with UK tax law.
The consideration at completion was $15.2bn (£9.5bn), including 37.567 million new BlackRock shares, giving an economic interest of 19.9% of the
enlarged BlackRock group. Barclays Group holds 4.9% of the voting rights and under the terms of the transaction may not acquire additional voting rights
and will vote in accordance with the recommendations of the BlackRock Board of Directors. John Varley and Robert E Diamond Jr. have been appointed to the
BlackRock Board, which comprises 18 Directors. The Group is not deemed to exercise significant influence and the investment has been accounted for as an
available for sale equity investment.
The Group has provided BlackRock with customary warranties and indemnities in connection with the sale. Barclays will also continue to indemnify
securities lending arrangements until 30th November 2012 (included within contingent liabilities in Note 34) and provide support to certain BGI cash funds
until December 2013 in the form of credit derivatives (included within derivative liabilities in Note 14) and financial guarantees (included within provisions in
Note 28).
In addition, Barclays, BlackRock and their respective affiliates also enter into agreements and transactions with one another in the ordinary course of their
respective businesses and on an arm’s length commercial basis, subject to applicable regulation and agreements with relevant regulators.
In connection with its financing of its acquisition of BGI, BlackRock entered into a 364-day revolving credit facility with a group of lenders including Barclays,
who is also acting as revolving agent. Of the $2bn credit facility, $0.8bn was committed by other lenders and following completion BlackRock had borrowed
or notified to be borrowed $1.5bn under the facility. All amounts borrowed under this facility have been fully repaid and the facility was terminated prior to
31st December 2009.
Prior year disposals
In 2008, the Group disposed of Barclays Life Assurance Limited. There were no material disposals in 2007.
Note
aNet cash consideration received from the sale of BGI, excluding the effect of hedging, cash
balances disposed of and transaction costs paid, was £2,469m.