Barclays sells German consumer arm in bid to ‘simplify’ business

The deal will see the company’s Hamburg-based division offloaded to Austrian commercial banking group BAWAG.

Barclays reported lower earnings and cut its profitability forecasts, as it revealed it is considering cutting costs (Alamy/PA)

Barclays has agreed to sell its German consumer finance arm to an Austrian bank as part of the high street lender’s latest efforts to simplify how the business is run.

The deal will see its Hamburg-based division offloaded to a subsidiary of BAWAG Group, a commercial banking group with customers across Europe and the US.

Barclays’ consumer bank – which offers credit cards, loans and savings to customers in Germany and Austria, and employs about 700 staff – has assets totalling 4.7 billion euros (£4 billion).

Barclays did not reveal the price of the deal, but said it would get a “small premium” to the value of its net assets.

It is also expected to release about four billion euros (£3.4 billion) of risk-weighted assets – meaning the amount of capital a bank must keep in reserve to account for unexpected losses.

The sale follows Barclays unveiling sweeping plans to strip out about £2 billion in costs in the coming years and home in on five key divisions going forward.

It announced the structural shake-up earlier this year as part of efforts to improve its financial performance, simplify the business, and return more money to investors.

The lender also wants to cut costs so that it spends less money on running the business compared to how much cash it generates.

Francesco Ceccato, the chief executive of Barclays Europe, said the German sale “aligns with our ambition to simplify Barclays” and will allow the European group to “focus on its corporate and investment banking and private banking businesses”.

BAWAG said it was “excited” about the purchase and was expecting it to boost its profits by at least 100 million euros (£85 million) in 2027.

Meanwhile, Barclays has been facing some pressure from activist groups over its sponsorship of the Wimbledon Championships tennis tournament.

A group of pro-Palestinian protesters gathered outside the event on Monday to demonstrate over the bank’s alleged ties to defence companies involved in the Gaza conflict.

Barclays suspended its sponsorship of Live Nation festivals last month, after bands pulled out of events as part of a pro-Palestine boycott.

The bank has previously addressed the criticism and said it provided financial services to nine defence companies supplying Israel but did not directly invest in such firms.