Barclays BCS has completed the sale of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of Austria-based BAWAG Group AG. This move aligns with the company’s plan to streamline its operations as outlined in the Investor Update in February 2024.

Consumer Bank Europe, covering the German and Austrian markets, had gross assets of €4.7 billion as of March 31, 2024, primarily in card and loan receivables.

While the financial terms of the deal, announced in July 2024, were not disclosed, Barclays noted that the “consideration payable was a small premium” to its tangible book value. The divestiture is expected to release €4.0 billion of risk-weighted assets, increasing the company’s Common Equity Tier 1 ratio by 10 basis points on a proforma basis.

Francesco Ceccato, CEO of Barclays Europe, said the bank “will now focus on supporting our institutional, corporate and high net worth clients, where we continue to see significant growth potential.”

Our Take on Barclays’ Restructuring Efforts

This sale is part of Barclays' broader strategy to exit retail banking in Europe, responding to shifts in consumer behavior post-pandemic. In addition to the German sale, Barclays has announced plans to enhance digital banking services in the U.K. and expand its corporate and investment banking presence globally, including new ventures in Asia.

In November 2024, Barclays made a significant move in the U.K. retail banking space by acquiring Tesco's TSCDY retail banking business for £600 million. This partnership with Tesco, the U.K.'s largest retailer, not only marks a key opportunity for Barclays to further its retail banking ambitions but also signifies a new chapter in expanding its customer base and distribution channels.

The divestiture supports Barclays financially by freeing up significant capital, improving its balance sheet and allowing for better allocation of resources to high-growth areas. This move reinforces the company’s commitment to becoming a more agile and efficient institution that is well-positioned for future opportunities.

Shares of this Zacks Rank #3 (Hold) company have rallied 36.7% in the past six months, significantly outperforming the industry’s growth of 15.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

Image Source: Zacks Investment Research

Similar to BCS, another U.K.-based lender, HSBC Holdings HSBC, is actively restructuring its operations in Germany to focus more on its growth strategy in Asia. In sync with this, in September 2024, the company signed an agreement to sell its private banking business in Germany to BNP Paribas. The deal's financial terms, expected to close in the third quarter of 2025, have not been disclosed.

The transaction, still subject to relevant regulatory approvals, is projected to result in a gain on sale for HSBC. It will help further simplify the company’s business model and enable it to focus on the global “wholesale banking business.”

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Barclays PLC (BCS) : Free Stock Analysis Report

Tesco PLC (TSCDY) : Free Stock Analysis Report

HSBC Holdings plc (HSBC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research