Barclays has moved on to exclusive talks with London-based private-equity firm CVC Partners to sell its iShares exchange-traded funds business for £3 billion.

A deal could be struck by the end of this week, according to a source close to the talks.

The sell-off will reduce pressure on Barclays to raise fresh capital from shareholders to bolster its balance sheet. The bank was given a clean bill of health by the regulator at the end of last week, and yesterday said it would not use the Government's toxic assets insurance scheme.

But many analysts believe it still needs to strengthen its balance sheet before then end of this year.

In a change to the original sell-off, which had been expected to fetch up to £4 billion, Barclays is to keep hold of iShares' share stock-lending business, which services tracker funds and short-sellers. This will remain part of Barclays Global Investors.

Analysts reckon that the stock-lending business, which had earnings of about $200 million (£140 million) last year, is worth some £1.4 billion.

A sale price of £3 billion for the rest of iShares would represent 10 times last year's earnings. The business was formed in 2000, and is now the largest exchange-traded fund group in the world.

It was not immediately clear whether CVC is bidding alone for iShares, which would represent one of the largest private-equity deals done for some time, or whether it is heading a consortium bid.

Other parties believed to have dropped out of the auction are a consortium involving Hellman & Friedman and Apax Partners and one including Colony Capital and Bain Capital. Goldman Sachs was reported to have shown interest in the stock-lending business alone.

Barclays declined to comment in detail on the talks, but said they were "progressing well".

Shares in the bank, which jumped more than 10p at one stage, were 0.2p higher at 149.3p.