Back to top

Image: Bigstock

Barclays Encounters Obstacles to Sell Its Merchant Payments Stake

Read MoreHide Full Article

Barclays PLC (BCS - Free Report) has been facing challenges to sell a stake in its U.K. merchant payments unit due to varied opinions on that business’ valuation, four people with knowledge of the matter informed Reuters.

What Makes This Pursuit Challenging for Barclays?

According to two of the sources, Brookfield was among the private equity firms that withdrew from bidding in recent months due to BCS’s high asking price.
 
Other sources mentioned that negotiations have been complicated by the acquisition of Takepayments, one of Barclays’ payments partners, leading to reduced revenues. Despite this, one source stated the bank remains open to selling a stake in the business.

“As we confirmed at our February investor update, we are exploring a number of options for investment in our market-leading merchant acquiring business, including strategic partnerships,” a spokesperson from Barclays stated.

Barclays initially aimed to value the business at more than £2 billion ($2.5 billion) per a report by Reuters. However, by the time sale documents were distributed to potential bidders, that valuation had dropped to just above £1 billion ($1.3 billion), according to two of the four sources. Also, the bank announced last December that it has reduced the valuation by £300 million ($392 million).

BCS’s struggle to offload its payment unit is caused by broader challenges in the European payments sector, which has experienced a decline across the last three years due to revenue concerns at companies like Nexi, Adyen and Worldline.

BCS’ Rationale Behind Offloading the Merchant’s Payment Unit

Barclays began to consider selling a stake in the unit last year as part of efforts by chief executive officer C.S. Venkatakrishnan to enhance the bank’s returns.

These efforts are largely a part of the company’s emphasis on simplification of its operations and increasing focus on core businesses.
 
This July, the company announced the divestiture of its German consumer finance business, while in April, BCS announced the disposal of its Italian mortgage portfolio (which was completed in the second quarter of 2024). Additionally, the company has sold $1.1 billion in credit card receivables to Blackstone’s Credit & Insurance segment to bolster lending capacity for Barclays Bank Delaware in the United States.

Barclays’ Zacks Rank & Price Performance

Year to date, shares of Barclays have surged 49% compared with the industry’s 9.4% growth. 

Zacks Investment Research
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.

Restructuring Efforts by Other Finance Firms

JPMorgan (JPM - Free Report) wants to increase its corporate banking presence in the Swiss markets by utilizing the company’s blockchain technology. Lutz Karl, who oversees JPM’s corporate banking operations in Germany, Switzerland and Austria, said that the Wall Street giant is in discussions with potential clients in Switzerland as the bank projects significant growth in its Swiss corporate banking division in the next three to five years.

By leveraging blockchain capabilities, JPM aims to enhance the efficiency, transparency and flexibility of its corporate banking services. The bank is setting a standard for corporate finance by offering programmable payments, cross-border transaction capabilities and real-time processing.

SEI Investments Co. (SEIC - Free Report) announced the integration of investment vehicles from KKR & Co. Inc. (KKR - Free Report) into its platform. This will enhance users’ accessibility to private markets. The platform is used by registered investment advisors, broker-dealers and other clients.

SEI Investments’ e-subscription technology offers better access to alternative investments, improved processing efficiency and an enhanced advisor and client experience. Further, the integration of investment vehicles from KKR to the platform will enhance product offerings.

Published in