Barclays is boosted by iShares sell-off hopes

The bank said it may sell its iShares division, part of Barclays Global Investors, and "has held discussions with a number of potentially interested parties".

It hopes it could get more than £4 billion for the business, staving off the need to raise further cash from shareholders, foreign investors or the Government to bolster its balance sheet.

The shares rose 7.4p to 81.5p, giving the bank a market value of £6.8 billion - less than double the £4 billion iShares could sell for.

Barclays also said it continues to "perform well" and has had "a strong start to 2009".

The auction of iShares comes as Barclays chief executive John Varley decides whether or not to join the Government's asset protection scheme set up to insure billions of pounds of junk on banks' balance sheets.

Barclays confirmed it was in talks with the Treasury and the Financial Services Authority about the scheme but it wants to pay in cash rather than shares if it joins.

Royal Bank of Scotland has already put £325 billion of toxic assets into the scheme while Lloyds Banking Group has ring-fenced £260 billion.

As a result, the Government's stake could hit 95% at RBS and 77% in Lloyds - something Varley is desperate to avoid at Barclays.

The sale of iShares would give Barclays much-needed cash to pay for entrance to the scheme but at the same time improve its capital position and reduce the need for it to do so.

Its tier one capital ratio, a key indicator of its financial strength, was 6.7% at the end of 2008 - considerably weaker than rivals such as HSBC.

Barclays is thought to be in discussions with a number of US institutions and private-equity investors interested in buying the iShares division, which specialises in exchange traded funds and is based at BGI's headquarters in San Francisco.

The sale is being led by Roger Jenkins, head of investment banking in the Middle East.

Barclays bosses regard £4 billion as a good price for iShares, given its size in relation to the rest of the bank.

Barclays has seen the value of the overall bank plummet from more than £40 billion to £6.8 billion since the start of the banking crisis.

BGI is one of the biggest fund managers in the world with £1 trillion on its books and iShares makes up a quarter of its business.

BGI delivered £600 million of the bank's £6 billion profit last year.