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Barclays (BCS) Plans to Sell Italy Loans Amid Restructuring Move
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As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
According to the people with knowledge of the matter, Barclays has started the divestiture process for a portfolio of mainly performing loans to individuals, while the package also includes non-performing mortgages and high-risk loans in Swiss francs.
People, who asked not to be identified as the plans are not yet public, said that the potential bidders have until the end of this month to submit non-binding offers.
The Italy loans are among the final remaining parts of Barclays’ retail business in the country.
In 2015, Barclays sold its consumer banking operations in Italy, and in 2016, it announced its intention to sell its residual Italy loans to shift focus toward investment and corporate banking.
Barclays’ strategy to exit the retail business follows its plan to dispose of non-core consumer operations in Europe and shift focus to the most profitable businesses in the U.K. and the United States.
Over the past six months, shares of Barclays have gained 2.1% compared with the industry’s rise of 5.4%.
Over the past few years, Barclays has been undertaking several restructuring actions to remain profitable. With the intention of simplifying operations and focusing on the core business, BCS has already restructured its business lines into two divisions and divested/closed several non-strategic and less profitable operations globally.
The bank completed the ring-fencing of its investment banking operations in April 2018 while reintegrating its non-core division into the company’s core operations in July 2017. Recently, BCS completed the acquisition of Kensington Mortgage, which will bolster its mortgage business in the U.K.
Notably, BCS plans to shut down 15 branches in the coming months. Of the total, 12 are located in England, two in Scotland and one in Wales.
In 2022, BCS announced plans to shut down 132 branches in the region, with several of those already closed.
The primary reason behind the branch closures is the changing habit of consumers while doing banking transactions. Since the pandemic, the number of customers using their local branch has reduced significantly, with the use of online banking services gaining traction.
Restructuring Efforts by Other Companies
Truist Financial (TFC - Free Report) announced the completion of a 20% stake sale in its subsidiary Truist Insurance Holdings ("TIH") to Stone Point Capital, in partnership with co-investors, including Mubadala Investment Company, for $1.95 billion. The cash deal, which values TIH at $14.75 billion in aggregate, was announced in February.
TFC now holds 80% of TIH (currently the sixth-largest insurance brokerage in the country). Also, a five-person board has been constituted to oversee TIH (continued to be led by the present chairman and CEO, John Howard), with four members appointed by Truist and one by Stone Point. The deal doesn’t include TIH’s premium finance business.
Citigroup Inc. (C - Free Report) announced the completion of the sale of its India consumer business to Axis Bank Limited. The sale was announced in March 2022. The sale includes retail banking, credit cards, wealth management and consumer loans, as well as the transfer of around 3,200 Citi employees.
The transaction is anticipated to result in a regulatory capital release of $1.4 billion. When the deal was announced, it was expected that Axis Bank would pay Citigroup $1.6 billion to acquire the consumer business, subject to customary closing adjustments.
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Barclays (BCS) Plans to Sell Italy Loans Amid Restructuring Move
As part of its plans to exit retail banking in Italy, Barclays PLC (BCS - Free Report) is searching for bidders for its Italy mortgage loans. Per a Bloomberg report, citing people with knowledge of the matter, BCS is seeking to sell €5 billion ($5.3 billion) of its mortgage loans in the country.
According to the people with knowledge of the matter, Barclays has started the divestiture process for a portfolio of mainly performing loans to individuals, while the package also includes non-performing mortgages and high-risk loans in Swiss francs.
People, who asked not to be identified as the plans are not yet public, said that the potential bidders have until the end of this month to submit non-binding offers.
The Italy loans are among the final remaining parts of Barclays’ retail business in the country.
In 2015, Barclays sold its consumer banking operations in Italy, and in 2016, it announced its intention to sell its residual Italy loans to shift focus toward investment and corporate banking.
Barclays’ strategy to exit the retail business follows its plan to dispose of non-core consumer operations in Europe and shift focus to the most profitable businesses in the U.K. and the United States.
Over the past six months, shares of Barclays have gained 2.1% compared with the industry’s rise of 5.4%.
Image Source: Zacks Investment Research
Currently, BCS carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our Take
Over the past few years, Barclays has been undertaking several restructuring actions to remain profitable. With the intention of simplifying operations and focusing on the core business, BCS has already restructured its business lines into two divisions and divested/closed several non-strategic and less profitable operations globally.
The bank completed the ring-fencing of its investment banking operations in April 2018 while reintegrating its non-core division into the company’s core operations in July 2017. Recently, BCS completed the acquisition of Kensington Mortgage, which will bolster its mortgage business in the U.K.
Notably, BCS plans to shut down 15 branches in the coming months. Of the total, 12 are located in England, two in Scotland and one in Wales.
In 2022, BCS announced plans to shut down 132 branches in the region, with several of those already closed.
The primary reason behind the branch closures is the changing habit of consumers while doing banking transactions. Since the pandemic, the number of customers using their local branch has reduced significantly, with the use of online banking services gaining traction.
Restructuring Efforts by Other Companies
Truist Financial (TFC - Free Report) announced the completion of a 20% stake sale in its subsidiary Truist Insurance Holdings ("TIH") to Stone Point Capital, in partnership with co-investors, including Mubadala Investment Company, for $1.95 billion. The cash deal, which values TIH at $14.75 billion in aggregate, was announced in February.
TFC now holds 80% of TIH (currently the sixth-largest insurance brokerage in the country). Also, a five-person board has been constituted to oversee TIH (continued to be led by the present chairman and CEO, John Howard), with four members appointed by Truist and one by Stone Point. The deal doesn’t include TIH’s premium finance business.
Citigroup Inc. (C - Free Report) announced the completion of the sale of its India consumer business to Axis Bank Limited. The sale was announced in March 2022. The sale includes retail banking, credit cards, wealth management and consumer loans, as well as the transfer of around 3,200 Citi employees.
The transaction is anticipated to result in a regulatory capital release of $1.4 billion. When the deal was announced, it was expected that Axis Bank would pay Citigroup $1.6 billion to acquire the consumer business, subject to customary closing adjustments.