Barclays has revealed plans to sell its fund management division - Barclays Global Investors (BGI) to US money management firm Blackrock.

The deal has been reported to go through for £8.2 billion, paid partly in cash and the rest in shares, a deal that will create the biggest asset manager in the world.

Barclays staff own stocks in BGI are to share a windfall. The president Bob Diamond will get £16m.

Barclays avoided financial help from the government and instead chose to raise money privately, allowing it to survive the financial crisis.

It has been reported that Barclays made the decision to sell BGI in order to raise additional funds, protecting it against future losses from loans and investments made by the bank, as well as helping it to weather any other financial storms that may lie ahead.

The takeover of BGI is expected to produce a firm with combined assets under management of over $2.7 trillion (£1.64 trillion) is about the same as the total annual output of the UK.

Barclays will have a 19.9 stake in the new company – which is to be renamed 'Blackrock Global Investors.

Blackrock chairman and chief executive Laurence D.

Fink said: “We are incredibly excited about the potential to significantly expand the scale and scope of our work with investors throughout the world. The combination of active and passive investments will be unsurpassed.”

Barclays' Bob Diamond said: "Our clients and our shareholders would benefit from the enhanced capability this proposed transaction would deliver."

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