London: Barclays is paying 237 million euros to sell its branches in Italy to Mediobanca in a deal that will give the Italian investment bank a boost in a race for asset management fees on its home turf.
Mediobanca said yesterday its retail division CheBanca! would buy from Barclays 89 branches with 220,000 clients, residential mortgage loans worth 2.9 billion euros ($3.1bn) and some 550 staff.
The sale is part of plans by Britain’s third biggest bank to shed continental European retail banking operations as it retreats from businesses that are unprofitable or lack scale. Barclays said it would book a £200m ($298.5m) loss on the transaction in the fourth quarter.
Milan-based Mediobanca has been seeking to diversify from its core investment-banking business and expand in more stable, less capital-intensive activities at a time when regulators are imposing stricter requirements.
With the Barclays deal, CheBanca!, founded in 2008 and focused on digital-savvy customers with between 50,000 and 200,000 euros, will nearly triple its number of branches and its client numbers will grow by 60 per cent to 770,000.
Total assets under management will double to more than 6bn euros. The transaction coincides with a move by Italian banks to draw more on the private household cash to make money and offset weak retail operations.
“This operation immediately gives us the scale in asset management that we needed and allows us to take a leap forward,” CheBanca! chief executive Gian Luca Sichel said.
He described the 237m euros CheBanca! is getting from Barclays as a “dowry” for restructuring and revamping the network, which he said breaks even.
He did not rule out that some branches could be closed in a country where most banks have been cutting their branch networks to reduce costs and are expected to continue to do so.
Barclays is likely to be left with more than £10bn, or 14bn euros, of Italian mortgages on its books, which it is trying to sell. It had £13.5bn of Italian residential mortgages at the start of the year.
The bank has already sold retail operations in Spain and Portugal and is seeking to sell in France.
The Italian sale will reduce Barclays’ risk-weighted assets by about £800m and result in a small decrease in its capital ratio.
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