BlackRock looks set to seal the acquisition of Barclays Global Investors as early as tomorrow, according to people close to the talks, in a deal that will make it the world’s biggest money manager.

The US group plans to pay Barclays $12bn-$13bn (£7.5bn-£8.1bn) for BGI – half in cash and half in shares – to create a group with more than $3,000bn in assets under management, half as much again as its nearest rivals, which include State Street, Allianz and Fidelity.

Bank insiders said the proceeds would boost Barclays’ 7% tier one capital ratio, a measure of its balance sheet strength, by more than 1 percentage point, bringing it closer into line with the expectations of the Financial Services Authority. Analysts said the BlackRock deal, as proposed, would be preferable to Barclays’ earlier plan to sell only iShares, the exchange-traded funds business of BGI.

Sandy Chen at Panmure Gordon said: 'This is a better deal all round. However, it does mean that Barclays, without BGI, will be more exposed to the earnings volatility of its investment banking operations.'

Financial Times