Barclays has completed today (August 30) the sale of its Italian retail banking network to CheBanca!, a member of the Mediobanca Group.
The offloading of the latest non-core business Barclays' will result in a decrease in risk weighted assets (RWAs) of £0.6bn and a loss before tax of £258m which was booked in Q4 2015.
Barclays' residual mortgage portfolio and other non-core retail, wealth and corporate loans will remain part of Barclays' non-core, 'with the intention to exit or rundown over time'.
Mediobanca is a marginal player in the structured retail products market in Italy and has marketed over 200 products aimed at retail investors of which 20 products are still live. Barclays has marketed through its own commercial network over 150 products in Italy of which 86 are still live products. Year to date, the UK bank has issued six products in the Italian market.
Although Barclays did not clarify if Mediobanca will manage the existing set of structured products the UK bank will continue to operate investment banking and corporate banking in Italy. Barclays will also continue to provide structured investments through Barclays Wealth & Investment Management and Barclays Investment Bank.
The announcement follows the bank's decision to exit its Bmarkets business in Europe in December 2015 as part of the strategic review which designated the business as non-core. Bmarkets comprised the bank's listed retail structured products, and was launched in 2010 in four European countries: France, Italy, Germany and Switzerland. Barclays entered the Italian listed certificate market in 2011 via the SeDex segment of the Italian Bourse.
Barclays completed the sale of its Barclays Risk Analytics and Index Solutions (Brais) to Bloomberg in mid-last week for approximately £615m..
Brais incorporates Barclays' fixed income benchmark indices, including the Barclays Aggregate family of indices, and Brais strategy indices. The benchmark indices have been rebranded as Bloomberg Barclays Indices, to reflect the change in ownership, for an initial period of five years. The transaction includes the sale of intellectual property in relation to the Point portfolio analytics tool. Barclays has agreed to continue to operate Point for 18 months post completion.
Barclays will retain its quantitative investment strategy (Qis) index business and the Barclays strategy indices, headed by Fabien Labouret (pictured), global head of EFS investment strategies at Barclays, which remains a core product of Barclays Corporate & International and are comprised by the Roubini Barclays Country Insights Indices, a family of tradeable equity indices based on the Roubini Country Insights model launched in July 2014, and the Shiller Barclays CAPE indices, developed jointly by Barclays and Professor Robert Shiller of Yale University. The calculation and maintenance of Barclays' strategy indices will be outsourced to Bloomberg.
The sale is part of the bank's strategic review that saw its equity derivatives/structured products investor solutions division restructured, and a new equities and funds structured (EFS) markets unit launched this summer.
There are over 500 structured products featuring Barclays' indices of which 163 are live products, according to the SRP database. The most popular Barclays indices in the retail structured products market include its Aggregate Bond Index, which is featured in 35 products, the 20+ Year US Treasury, which appears in 22 products, and the Black Chips Price Return USD Index, which has been deployed in 20 structured products in South Africa.
The pre-tax gain recognised on completion of the transaction is approximately £535m. Given the nature of the Brais business, it will have a negligible impact on RWAs, according to the bank.
Jes Staley, Barclays Group CEO, said in a statement that the bank is 'focused on closing down Barclays Non-Core as fast as possible, so that we can unlock the earnings power of Barclays UK and Barclays Corporate & International for our shareholders'. Today's announcement takes us another step towards the delivery of our strategy, and we intend to keep up the pace of progress to Non-Core closure in 2017.
According to Staley, Barclays will accelerate the non-core rundown during the second half of 2016 with the sale of its cards business in Iberia; and the sale of its Wealth business in Asia. These transactions, including Brais, will bring down annualised costs in non-core by £250m and reduce RWAs by a further £3bn.
JP Zammitt, Bloomberg's global head of financial products said in a statement that 'properly constructed' benchmark and strategy indices, and state of the art analytics, continue to grow in importance to the investment community as the global markets evolve in a fast-changing regulatory environment.
'Bloomberg is committed to being at the forefront of these developments, and is well-positioned to grow and evolve the Brais business for a broader set of market participants than ever before, building on our strengths in fixed income data, analytics, distribution, technology, pricing and news,' said Zamit.
The acquisition adds to Bloomberg's index business which already manages the Bloomberg Commodity Index: BCOM (formerly the Dow Jones-UBS Commodity Index), and the Bloomberg AusBond Indices (formerly the UBS Australia Bond Index family).
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