Barclays On A Spanish Selling Spree

Taking The Bull By The Horns?: Barclays On A Spanish Selling Spree

Barclays has proved to be a matador who knows how to dodge the bull or take it by the horns depending upon which way you prefer to look at it. The British bank is selling its Spanish retail and corporate banking operations. The buyer is none other than Caixabank. As part of the massive overhaul, the British bank will commence with right sizing its struggling European units.

Caixabank is the third largest lender in Spain. It is also one of the leaders when it comes to making acquisitions in the face of the recent financial crisis. The Spanish bank is set to pay 800 million Euros or $1.05 billion for the Spanish sub-division of the British unit. The deal is also inclusive of wealth management.

This is one of the biggest steps that Barclay has taken to exit the retail banking business in Europe. This is part of the plan by Antony Jenkins, the Chief Executive who has scripted the turnaround program to help Barclays evade the stampede of financial ruin and generate massive profits. The British bank is also going to cut a lot of jobs within the next 3 years. This is also part of the restructuring and the aim is to focus on Britain and Africa only for now.

The bank is also going to concentrate on the credit card and investment banking business in the US and the UK. Non-core units of the bank such as the UAE retail banking business have already been sold. “We remain on track to rebalance Barclays” Jenkins has been quoted as saying by the media.

The British bank is said to be making a loss on the sale of around 500 million pounds of which 400 million pounds are to be reported in the third quarter of this year. The rest will be based on the completion of the deal, according to the bank.

Barclays is a bank that took advantage of the expansion spree during the early 200s and spread to Spain. But losses and job cuts characterized its Spanish stint. Massive losses from the property crash in 2008 as well as the jump towards selling non-core and non-performing units has been common since then

Barclays has so far given up on Spain, Italy as well as Portugal and France. With the units of these nations being relegated to bad bank so that they can be sold or floated separately. Massive losses in the European retail business have translated into dismal prospects for the companies operating here. Caxiabank has benefited considerably from it. It has bailed out many damsels (read banks) in distress before being the knight in shining armor for Barclays.

So what does the knight on a mission of mercy gain? The Spanish bank will be acquiring a 270 branch network and 2,400 units from the British bank. It will also be taking on board around 550,000 retail as well as private banking clients. The final price for the asset will be based on the net asset value of Barclays bank. With so many positive reasons for the acquisition, Caixabank is banking on surety this time.