The deal will see Barclays’ Hamburg-based unit being bought by a subsidiary of BAWAG Group, which serves customers across Europe and the US
Barclays is streamlining its operations by selling off its German consumer finance branch to an Austrian bank, in a move that will simplify the business structure.
The transaction involves Barclays’ Hamburg-based unit being snapped up by a subsidiary of BAWAG Group, which serves customers across Europe and the US. This part of Barclays’ business, which provides credit cards, loans, and savings in Germany and Austria and has around 700 employees, boasts assets worth 4.7 billion euros (£4billion).
While the exact figures haven’t been disclosed, Barclays is set to receive a “small premium” on the net asset value from the deal. Additionally, the sale is expected to free up approximately four billion euros (£3.4 billion) of risk-weighted assets, thereby reducing the capital reserves required for potential losses.
This strategic disposal comes as part of Barclays’ broader initiative to slash around £2 billion in costs over the next few years and concentrate on five core divisions. Earlier this year, Barclays announced this major overhaul aimed at boosting financial performance, streamlining operations, and enhancing shareholder returns.
Moreover, the bank is looking to reduce its cost-to-income ratio, meaning it aims to spend less on operational expenses relative to its revenue generation. Francesco Ceccato, the chief executive of Barclays Europe, has stated that the sale in Germany “aligns with our ambition to simplify Barclays” and will allow the European group to “focus on its corporate and investment banking and private banking businesses”.
BAWAG expressed its excitement about the acquisition, anticipating it to boost its profits by at least 100 million euros (£85million) in 2027. Meanwhile, Barclays has been under some scrutiny from activist groups due to its sponsorship of the Wimbledon Championships tennis tournament.
Pro-Palestinian protesters assembled outside the event on Monday to protest against the bank’s alleged connections to defence companies involved in the Gaza conflict. Barclays put a pause on its sponsorship of Live Nation festivals last month, following bands withdrawing from events as part of a pro-Palestine boycott.
The bank has previously responded to the criticism, stating it provided financial services to nine defence companies supplying Israel but did not directly invest in such firms.
