Barclays to sell German consumer finance business in latest European disposal

Barclays has struck a deal to sell its German consumer finance unit to Vienna-based financial group Bawag as the FTSE 100 lender tries to streamline its operations in continental Europe.

The bank said on Thursday that Bawag would acquire the Hamburg-based business for a “small premium to net assets”, to be payable in cash on completion.

Barclays did not disclose the value of the transaction. It was reported last July that the bank may have sought around €500m (£423m) for the business, formerly known as Barclaycard Germany.

The deal aligns with Barclays’ strategy to fully exit European retail banking outside of the UK as part of a wider restructuring designed to cut costs and boost shareholder returns.

Chief executive CS Venkatakrishnan said in a February investor presentation that the bank was in “advanced discussions” over the sale of its German cards business, as well as its Italian mortgage book – which it later disposed of in April.

“This transaction will also allow Barclays Europe to focus on its corporate and investment banking and private banking businesses,” Francesco Ceccato, CEO of Barclays Europe, said on Thursday.

“We remain committed to our broader German and European operations and look forward to continued growth in the region during 2024 and beyond.” 

The German consumer finance unit had gross assets of €4.7 billion (£4bn) as of 31 March, mainly comprising card and loan receivables.

The sale is subject to regulatory approvals and expected to occur in six to nine months. Barclays said the deal is expected to release €4bn (£3.4bn) in risk-weighted assets and boost its CET1 ratio – a measure of a bank’s financial strength – by around 10 basis points on completion.

In a separate statement, Bawag said the transaction is expected to contribute a pretax profit of more than €100m (£85m) in 2027 after full integration.