Barclays Slims Down, Sells German Consumer Unit

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Barclays announced on Thursday its decision to sell its German consumer finance business to Austrian bank BAWAG Group AG (BAWG.VI), marking a strategic move by the British lender to streamline its operations. The sale, set at a slight premium to net assets, will enable BAWAG to expand its loan portfolio and customer base in the region.

Last year, Reuters reported that BAWAG was a front-runner among several European banks and private equity firms vying for the acquisition. The cash transaction by Barclays Europe is projected to release approximately 4 billion euros ($4.32 billion) of risk-weighted assets and enhance the bank’s CET1 ratio by approximately 10 basis points, though specific financial terms were not disclosed.

Barclays’ German unit, known as Consumer Bank Europe and based in Hamburg, primarily deals in card and loan receivables, boasting gross assets of 4.7 billion euros as of March. Francesco Ceccato, CEO of Barclays Europe, emphasized that the sale aligns with their strategy to simplify operations, allowing a heightened focus on corporate, investment banking, and private banking sectors.

Ceccato expressed confidence in continued growth across Germany and Europe beyond 2024. The transaction, subject to regulatory and legal approvals, is anticipated to close within six to nine months.

Established in 1991, Barclays’ consumer finance arm in Germany employs about 700 staff. The decision to divest follows strategic adjustments due to changed consumer spending behaviors during the COVID-19 pandemic, with Barclays progressively reducing its retail footprint in Europe.

Shares of both Barclays and BAWAG saw marginal gains of approximately 1.1% in early trading, reflecting market stability in line with the broader European banking index.