Barclays to offload German consumer finance business to BAWAG

Austria's BAWAG Group has announced its acquisition of Barclays Consumer Bank Europe, the Hamburg-based German consumer lending arm of the British bank.

The deal, announced on 4 July, marks a strategic expansion for BAWAG in the DACH/NL region and signals Barclays' continued efforts to streamline its operations.

The transaction is expected to close in late 2024 or early 2025 subject to regulatory approval. It will see BAWAG take control of a business with gross assets of €4.7 billion as of 31 March 2024. This primarily comprises card and loan receivables, with approximately €2 billion in credit card receivables.

Anas Abuzaakouk, chief exec of BAWAG Group, expressed enthusiasm about the acquisition, stating, "This is a great strategic fit in terms of product offering, market presence, customer base, and team members with deep credit card expertise based in Hamburg. This acquisition provides us with a German consumer lending platform focused on credit cards, personal loans, and savings products across a large and diverse customer base."

The deal is expected to create substantial value for BAWAG, with projected profit before tax contribution exceeding €100 million by 2027 once fully integrated. The CET1 impact is anticipated to be around 140 basis points.

For Barclays, the sale aligns with its strategy to simplify its business structure. Francesco Ceccato, chief exec of Barclays Europe, commented, "The sale of Consumer Bank Europe aligns with our ambition to simplify Barclays. We remain committed to our broader German and European operations and look forward to continued growth in the region during 2024 and beyond."

The Barclays unit, which has been operating in Germany for over three decades, has established itself as a leading provider of credit cards with genuine credit functions. Tobias Grieß, chief exec of Barclays Consumer Bank Europe, remarked on the transition: "With BAWAG Group's financial strength, digital know-how and ambitions behind us, we will further strengthen our foundation and capture opportunities ahead."

This acquisition is BAWAG's second in 2024, reflecting its aggressive growth strategy in core markets. The Austrian bank, which serves 2.1 million customers across multiple European countries and the United States, aims to leverage this purchase to enhance its position in the German market and expand its product offerings.

The move comes amidst a broader trend of European banks reassessing their consumer finance operations, with other institutions like Societe Generale also exploring similar divestments in Germany.

As both companies await regulatory green lights, the financial sector watches closely to see how this deal will reshape the competitive landscape in European consumer finance.

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