Barclays has agreed to sell its Portugal-based non-core assets to Spain’s Bankinter for about €175m (£128m), as part of executive chairman John McFarlane’s plans to sell assets and cut costs. The sale includes the bank’s retail banking, wealth and insurance management and part of corporate banking.
Barclays has been active in the Portuguese retail structured products for 15 years and has marketed over 100 products via its retail branches including structured notes (obrigacoes), structured deposits and structured certificates worth €1.8bn. Following the acquisition, Bankinter will manage income payments and redemptions on 51 live Barclays structures in Portugal which are set to mature between September 2015 and October 2020 with an estimated value of €800m, according to sources. Of these, 48 structures were hedged by: Societe Generale (20), Credit Suisse (14), BNP Paribas (7), Morgan Stanley (6), and Barclays Capital (1).
“All retail customers and their associated Barclays products will transfer [to Bankinter],” said an official at Barclays in London. The UK bank has also agreed to sell its insurance business for €75m to Bankinter’s subsidiary Bankinter Vida, which operates an insurance joint venture with Mapfre.
After completing these transactions, Barclays expects a reduction of about £1.7bn in its risk-weighted assets. The bank also expects to incur a loss of about £200m after tax, part of which will be recorded in the third quarter of 2015.
About 1,000 Barclays banking and insurance employees and 84 branches are expected to be transferred to Bankinter and Bankinter Vida. The UK bank said it would continue to operate Barclaycard, investment banking and multinational corporate banking in Portugal.
Bankinter is an active provider of structured products in Spain with more than 340 products marketed, including structured deposits, capital-protected funds, structured notes and life insurance products, of which 110 are live products.
The agreement comes one year after Barclays Bank agreed to offload its retail banking, wealth and investment management and corporate banking in Spain to CaixaBank (formerly La Caixa), which provided the Spanish lender with more than €1.5bn of estimated assets under management (AUM) in structured products.
In June, the UK bank sold its Barclays Wealth and Investment Management, Americas franchise, which had approximately 180 financial advisers in the US managing approximately $56bn in total client assets, to Stifel Financial Corp, a brokerage and investment banking company. As part of this agreement, Stifel will be the US private wealth distribution partner for certain of Barclays’ equities and credit new issue securities in the US, including structured notes.
Barclays was the third most active issuer of structured notes in the US in 2014 with a 10% market share and more than $4.8bn in sales, beating some domestic household names, such as Goldman Sachs (9% market share/$4bn in sales), Morgan Stanley (6% market share/$2.8bn in sales) and Bank of America (5% market share/$2.5bn in sales). This year, the UK bank has sold over $2.6bn and remains in the top three providers ranking behind Goldman ($3bn) and JP Morgan ($4.7bn). There are seven structured notes open for subscription sold by Barclays in the US.
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