Barclays Focuses on Core Sectors After German Unit Sale
Barclays has announced the sale of its German consumer finance business to Austrian bank BAWAG Group AG, aligning with its strategy to simplify operations and focus on core sectors.
Details of the Sale
The sale involves Barclays Bank Ireland PLC’s Consumer Bank Europe unit, which encompasses established credit card, consumer loan, and deposit franchises in the German and Austrian markets. The transaction, expected to release approximately €4 billion of risk-weighted assets, will enhance Barclays’ Common Equity Tier 1 (CET1) ratio by about ten basis points.
Francesco Ceccato, CEO of Barclays Europe, commented, “The sale of Consumer Bank Europe aligns with our ambition to simplify Barclays. In BAWAG, we believe we have found a strong and committed owner for the business’ journey forwards.”
Strategic Implications
Consumer Bank Europe had gross assets of €4.7 billion as of March 2024, mainly card and loan receivables. BAWAG will acquire the business for a small premium to net assets, payable in cash. Subject to regulatory and legal approvals, the deal is expected to be completed within six to nine months.
Barclays aims to streamline its operations by focusing on the corporate, investment, and private banking sectors. Ceccato noted, “We remain committed to our broader German and European operations and look forward to continued growth in the region during 2024 and beyond.”
Historical Context
The German consumer finance unit has operated since 1991 and employs around 700 people. The decision to divest follows consumer spending habits post-COVID-19 changes, prompting Barclays to reassess its retail business strategy in Europe.
In February 2024, Barclays sold approximately USD 1.1 billion worth of credit card debt to private equity firm Blackstone. This sale was part of Barclays’ strategy to reduce balance sheet assets ahead of stricter regulatory requirements.
Conclusion
The sale of Barclays’ German consumer finance business to BAWAG represents a strategic move to simplify operations and strengthen its focus on core banking sectors. Barclays remains optimistic about its future growth in Europe as the deal progresses.
