Barclays (NYSE: BCS) is selling its German consumer finance business to Austrian bank BAWAG Group AG for a small premium to net assets, it said on Thursday, as the British lender aims to simplify its business.
The sale of the Hamburg-based Barclays unit to BAWAG will give the Austrian bank the ability to expand its loan book and customer base in the region.
Reuters reported last year that BAWAG was a leading contender in bidding that included other European banks and private equity firms.
The cash sale by Barclays Europe is expected to release about 4 billion euros ($4.32 billion) of risk-weighted assets and will increase the CET1 ratio – which measures capital strength – by about 10 basis points, Barclays said.
It did not give the sale price.
The German business, called Consumer Bank Europe, serves customers in the German and Austrian markets and had gross assets of 4.7 billion euros at March-end, primarily in card and loan receivables.
“The sale of Consumer Bank Europe aligns with our ambition to simplify Barclays,” said Francesco Ceccato, Barclays Europe’s CEO, adding that the deal would allow the bank to focus on corporate, investment banking, and private banking businesses.
“We remain committed to our broader German and European operations and look forward to continued growth in the region during 2024 and beyond,” he said.
The deal is expected to be completed in six to nine months, depending on regulatory and legal approvals.
The Barclays consumer finance operation has about 700 employees and started operating in Germany in 1991.
Barclays has been cutting back its retail businesses in Europe and the German sale was prompted by consumers’ more conservative spending habits since the COVID-19 pandemic.
Barclays and BAWAG shares were up around 1.1% in early trade, roughly in line with the European banking index.
($1 = 0.9269 euros)
(Source: ReutersReuters)
