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Barclays (BCS) to Sell German Consumer Finance Business
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Barclays (BCS - Free Report) has announced the divestiture of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of BAWAG Group AG. This strategic move aligns with the company’s plan to streamline its operations as outlined in the Investor Update on Feb 20, 2024.
Consumer Bank Europe, which serves the German and Austrian markets with credit card, consumer loan, and deposit services, had gross assets of €4.7 billion as of Mar 31, 2024. The entity, which has been operating in Germany since 1991, has approximately 700 employees.
The sale, which will be completed for a small premium to net assets, is expected to release nearly €4.0 billion of risk-weighted assets. This transaction will bolster Barclays’ Common Equity Tier 1 ratio by about 10 basis points, enhancing its capital strength. The completion of the transaction is anticipated within six to nine months, subject to regulatory and court approvals.
Francesco Ceccato, CEO of Barclays Europe, emphasized that this divestment is in line with the company’s objective to simplify its business. He noted that the transaction would enable Barclays Europe to concentrate on its core corporate and investment banking and private banking businesses. Despite the sale, BCS remains committed to its operations in Germany and Europe, targeting continued growth in these regions.
This sale is part of Barclays' broader strategy to exit retail banking in Europe, responding to shifts in consumer behavior post-pandemic. In addition to the German sale, Barclays recently announced plans to expand its corporate and investment banking presence globally, including new ventures in Asia, and enhance digital banking services in the UK.
In February, Barclays made a significant move in the U.K. retail banking space by announcing a deal to acquire Tesco's (TSCDY - Free Report) retail banking business for £600 million. This partnership with Tesco, the UK's largest retailer, not only marks a key opportunity for Barclays to further its retail banking ambitions but also signifies a new chapter in expanding its customer base and distribution channels.
The divestiture supports Barclays financially by freeing up significant capital, improving its balance sheet and allowing for better allocation of resources to high-growth areas. This move reinforces the company’s commitment to become a more agile and efficient institution, well-positioned for future opportunities.
Similar to BCS, another U.K.-based lender, HSBC Holdings (HSBC - Free Report) , is actively restructuring its operations in Germany to focus more on its growth strategy in Asia. The bank has put its Germany-based fund administration unit INKA and custody business up for sale, attracting interest from several major financial institutions.
The sale process, expected to begin soon, could fetch HSBC more than €700 million ($751.17 million).
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Barclays (BCS) to Sell German Consumer Finance Business
Barclays (BCS - Free Report) has announced the divestiture of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of BAWAG Group AG. This strategic move aligns with the company’s plan to streamline its operations as outlined in the Investor Update on Feb 20, 2024.
Consumer Bank Europe, which serves the German and Austrian markets with credit card, consumer loan, and deposit services, had gross assets of €4.7 billion as of Mar 31, 2024. The entity, which has been operating in Germany since 1991, has approximately 700 employees.
The sale, which will be completed for a small premium to net assets, is expected to release nearly €4.0 billion of risk-weighted assets. This transaction will bolster Barclays’ Common Equity Tier 1 ratio by about 10 basis points, enhancing its capital strength. The completion of the transaction is anticipated within six to nine months, subject to regulatory and court approvals.
Francesco Ceccato, CEO of Barclays Europe, emphasized that this divestment is in line with the company’s objective to simplify its business. He noted that the transaction would enable Barclays Europe to concentrate on its core corporate and investment banking and private banking businesses. Despite the sale, BCS remains committed to its operations in Germany and Europe, targeting continued growth in these regions.
This sale is part of Barclays' broader strategy to exit retail banking in Europe, responding to shifts in consumer behavior post-pandemic. In addition to the German sale, Barclays recently announced plans to expand its corporate and investment banking presence globally, including new ventures in Asia, and enhance digital banking services in the UK.
In February, Barclays made a significant move in the U.K. retail banking space by announcing a deal to acquire Tesco's (TSCDY - Free Report) retail banking business for £600 million. This partnership with Tesco, the UK's largest retailer, not only marks a key opportunity for Barclays to further its retail banking ambitions but also signifies a new chapter in expanding its customer base and distribution channels.
The divestiture supports Barclays financially by freeing up significant capital, improving its balance sheet and allowing for better allocation of resources to high-growth areas. This move reinforces the company’s commitment to become a more agile and efficient institution, well-positioned for future opportunities.
Shares of this Zacks Rank #3 (Hold) company have rallied 38% in the past six months, significantly outperforming the industry’s growth of 6.7%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Similar to BCS, another U.K.-based lender, HSBC Holdings (HSBC - Free Report) , is actively restructuring its operations in Germany to focus more on its growth strategy in Asia. The bank has put its Germany-based fund administration unit INKA and custody business up for sale, attracting interest from several major financial institutions.
The sale process, expected to begin soon, could fetch HSBC more than €700 million ($751.17 million).