Barclays Sells German Consumer Finance Business to Austria’s Bawag
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Loading... - Bill Bouchard
- 05 Jul 2024
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Barclays has agreed to sell its German consumer finance business to a subsidiary of Austrian bank Bawag Group, as part of its ongoing efforts to streamline its operations. The announcement was made on July 4th, with the British lender detailing the transaction involving its Hamburg-based Consumer Bank Europe, which caters to the German and Austrian markets with various retail banking services.
Transaction Details:
- Gross Assets: Barclays Consumer Bank Europe held €4.7 billion in gross assets, primarily from card and loan receivables, as of March 31.
- Sale Agreement: The business will be sold for a small premium over net assets, to be paid in cash upon the deal’s closure.
- Risk-Weighted Assets: The sale is expected to release approximately €4.0 billion in risk-weighted assets.
- Capital Strength: The transaction will enhance Barclays' common equity Tier 1 ratio — a key indicator of financial strength — by roughly 10 basis points upon completion.
Timeline and Approvals:
The deal is anticipated to be finalized within six to nine months, pending regulatory approvals.
Impact on Bawag:
For Bawag, the acquisition is projected to contribute over €100 million in pre-tax profit by 2027, following the integration of the unit. The Austrian bank highlighted this expected financial benefit in a separate statement, underscoring the strategic value of the purchase.
This move by Barclays aligns with its broader strategy to simplify its business model, focusing on core areas while divesting from non-essential operations. The transaction also marks a significant expansion for Bawag in the German and Austrian markets, promising to bolster its financial performance in the coming years.
