Rebirth of England.

Chapter 668 BGI
In fact, not only for Britain, but also for the current European Union, the best strategy is to get close to the United States politically, cooperate with China economically, and trade with Russia on energy.

Only this strategy can maintain its relative independence and avoid becoming a vassal of one party.

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

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

After all, he didn't think that even if he was a reborn person, he could stop this process with his power.

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

After meeting with Treasury Secretary Darling, Barron went to see Davis of Standard Chartered Merrill Lynch, who had recently been in frequent contact with Barclays Chairman Robert Diamond.

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

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

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

The reason for this is, of course, that the management of Barclays Bank 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 did not meet this requirement...

One of the main reasons is that Barclays Bank bought Lehman Brothers' equity and corporate financing business for US$17.5 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 has overvalued its financial assets and requires it to increase capital and reduce the ratio of capital to bonds.

Although the British government is willing to provide funds to Barclays, Barclays, or to be frank, the management of Barclays is avoiding it as much as possible - because after the British government rescues Barclays, it will inevitably limit the salaries 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 more than US$100 billion in funds to Barclays Bank. After obtaining these funds, Barclays Bank's Tier 8 core capital adequacy ratio will exceed %, thus meeting the requirements of the British government.

In acquiring Barclays Global Investors (BGI), Standard Chartered Merrill Lynch valued the high-quality brand of iShares ETF business owned by BGI.

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

In addition to Standard Chartered Merrill Lynch, other investors interested in BGI under Barclays include CVC Capital, Blackstone Group and BlackRock Group.

Baron knew that in his previous life, it was BlackRock Group that ultimately took the "risk" to acquire BGI, which was a rare success 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 move, 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 U.S. Securities Exchange Act!
Therefore, each ETF needs to be exempted by the Securities and Exchange Commission before it can start raising funds and operating. If the SEC no longer issues exemptions and withdraws the exemptions that have been issued, ETFs will be doomed, and BlackRock will also lose everything.

But after BlackRock Group acquired BGI, the Federal Reserve's quantitative easing policy was in full swing, and ETFs took advantage of this "tailwind" and rose to prominence.

Since then, global ETF assets have continued to rise, from $2009 trillion in 1 to $5.4 trillion a decade later.

Under this general trend, BlackRock Group's ETF business also grew rapidly - in 2009, when BlackRock Group acquired BGI, iShares' assets were US$3000 billion. Ten years later, it increased to nearly US$2 trillion.

It can be said that if the Federal Reserve had not continued its quantitative easing policy and provided cheap money, ETFs would never have been able to develop so rapidly.

Cheap money provided a lot of spare cash to invest in the stock market, pushing stock prices up.

Without volatility in the stock market, there are fewer opportunities for short selling and long selling, but ETFs have market makers, providing continuous arbitrage opportunities.

Seeing all this, Standard Chartered Merrill Lynch naturally has plans to enter the ETF market in a big way. This time, through the acquisition of 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 Group to some extent.

Although DS Group also holds shares in BlackRock Group, it is only a tiny bit after all, which is far less attractive than the benefits that DS Group's "own son" Standard Chartered Merrill Lynch Group would obtain.

Therefore, Standard Chartered Merrill Lynch proposed to Barclays Bank to acquire Barclays Global Investments (BGI) for US$100 billion in cash and US$35 billion worth of stocks, with a total value of US$135 billion.

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

"Among the current institutions, CVC Capital is only willing to purchase BGI's ETF fund iShares. Between Blackstone and BlackRock, BlackRock's attitude is more positive, but it still lags behind us in terms of bidding, and they can only come up with less than US$50 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 that regard."

Barron was also aware of this matter, because just last week, Larry Fink, chairman of BlackRock Group, called him, hoping to get some funds from Barron by issuing corporate bonds...

Larry Fink couldn't have been unaware that Barron was a major shareholder of Standard Chartered Merrill Lynch, but since he had spoken to Barron, it also showed that he did not miss any possible opportunity to raise funds.

Of course, the result was not surprising. Barron declined Larry Fink's proposal.

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

(End of this chapter)