The UK bank continues the accelerated rundown of its non-core operations
Barclays Bank has completed the sale of its retail banking, wealth and investment management and part of its corporate banking business in Portugal to Spain's Bankinter for about €175m (£128m). The UK bank has also completed the sale of its insurance business in Portugal to Bankinter Seguros de Vida which operates an insurance joint-venture with Mapfre.
Bankinter is an active provider of structured products in Spain (544 products of which 290 are live products), and has dominated the retail issuance since 2013 while Mapfre has been a marginal market player which stopped issuing products in 2014.
Bankinter will be the distributor of some Barclays’ issued notes, previously distributed by Barclays Bank plc Portugal, according to José Miguel Calheiros, former director and head of global research & investments at wealth and investment management division of Barclays Bank in Portugal, now a director at Bankinter, who pointed the UK bank "has issued far more structured notes or acted as counterparty for swaps than the ones distributed by Barclays Bank Portugal".
Barclay's rundown of its activities in Portugal is the latest move by the bank towards completing the restructuring of its non-core risk-weighted asset (RWAs). Between its creation in 2014 and the end of 2015, the bank's non-core RWAs were reduced from £110bn to £47bn. This transaction results in a further decrease in risk weighted assets of approximately £1.8bn.
The Portuguese businesses transferred to Bankinter and Bankinter Vida on Friday last week comprises around 1,000 banking and insurance employees and 84 branches. Barclays will continue to operate Barclaycard, investment banking and multinational corporate banking in Portugal. In 2005, Barclays sold to CaixaBank (formerly La Caixa) its retail banking, wealth and investment management and corporate banking in Spain, and also signed agreements to sell both its Portuguese and Italian retail banks.
"Completing the sale of Barclays' retail, wealth, insurance and part of the corporate banking business in Portugal today demonstrates further progress towards our target of managing down risk weighted assets in Barclays non-core to around £20bn by the end of 2017," said Harry Harrison (pictured), co-head of Barclays non-core, said in a statement. "The sale is also expected to reduce BNC annualised costs by £72m."
Barclays has been active in the Portuguese retail structured products market for 15 years and has sold over 120 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 50 live Barclays structures in Portugal which are set to mature between September 2015 and October 2020 and have an estimated value of €800m, according to SRP data.
The UK bank has been a top 10 provider in Portugal for many years and made it to the top three in 2011 after clawing a 16% market share across €416m in sales. The bank finished 2015 with a 3% market share on the back of €205m worth of structured products sales. Year to date, Barclays has marketed 30 structured products among Portuguese retail investors.
Barclays has been undergoing a significant overhaul of its operations since 2014. Most recently, the bank reached an agreement with Bloomberg to sell its Barclays Risk Analytics and Index Solutions (Brais) for approximately US$790m (£520m), with completion expected by mid-2016. The bank's investment strategy index business will retain the Roubini Barclays Country Insights Indices, and the Shiller Barclays CAPE indices. The UK bank will also keep its quantitative investment strategy index business, the calculation and maintenance of which will be done by Bloomberg.
Barclays also announced in December 2015 that it was unplugging its European listed structured products Bmarkets business although it will continue to provide structured investments through Barclays Wealth & Investment Management and Barclays Investment Bank. Bmarkets was launched in 2010, and operated in four European countries: France, Italy, Germany and Switzerland. The bank halted all new issuance and only provides bid prices on outstanding Bmarkets securities, subject to Barclays' discretion, of around 3% above fair market value.
SRP data shows that the UK bank marketed 948 tranche-based products globally in 2015 compared to 969 tranche-based structured products across jurisdictions in 2014. According to SRP data, Barclays retained its position in the top 10 global market share ranking with a 2% market share in relation to tranche-based products in 2015, and sales worth US$6.4bn across jurisdictions, compared to US$5.8bn registered in 2014.
This update includes a clarification about the distribution of Barclays products and comment from José Miguel Calheiros, director at Bankinter.
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