The transaction, aimed at streamlining Barclays' operations, involves its Hamburg-based unit and is expected to enable BAWAG to expand its loan portfolio and customer base in the region.
Last year, BAWAG emerged as a top contender among several European banks and private equity firms bidding for the acquisition, according to previous reports by Reuters. The sale is anticipated to release approximately EUR 4 billion of risk-weighted assets for Barclays Europe and improve its CET1 ratio by about 10 basis points. However, Barclays did not disclose the exact sale price.
The German business, known as Consumer Bank Europe, operates primarily in the German and Austrian markets with gross assets of EUR 4.7 billion as of March-end, predominantly in card and loan receivables. Representatives from Barclays Europe stated that the sale aligns with the bank's strategy to simplify its operations, emphasising corporate, investment banking, and private banking sectors. They expressed commitment to Barclays' broader German and European operations, anticipating continued growth in the region beyond 2024.
The completion of the deal is projected to take between six to nine months, contingent upon regulatory and legal approvals. Barclays' consumer finance division in Germany, established in 1991, currently employs approximately 700 individuals according to Reuters.
The decision to divest from its retail businesses in Europe, including the German market, reflects Barclays' response to shifts in consumer spending patterns following the COVID-19 pandemic. Both Barclays and BAWAG Group AG saw modest increases in their share prices during early trading, aligning closely with movements in the European banking index.
In February 2024, Barclays decided to sell around USD 1.1 billion worth of credit card debt to private equity firm Blackstone. This move was part of Barclays' strategy to reduce assets on its balance sheet ahead of stricter regulatory requirements. It also highlighted the increasing involvement of major private capital firms such as Blackstone in mainstream debt markets, where they faced fewer regulatory constraints compared to traditional banks.
According to the deal, Blackstone's credit and insurance division purchased the US credit card receivables from Barclays for an undisclosed amount, with Barclays retaining the servicing of the accounts for a fee.
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