BARCLAYS will sell its Portuguese arm to the Spanish lender Bankinter this week as part of a radical cost-cutting exercise.
The sale could fetch as little as €300m (£220m) — less than the value of the assets, according to analysts. The unit made a pre-tax loss of €22.3m in the first half of last year, following losses in the previous three years.
The sale is expected to include 85 branches as well as the bank’s corporate banking business, but will exclude the investment banking and credit card operations.
John McFarlane, Barclays’ executive chairman, has said he wants to accelerate the run-down of its loss-making European operations, including its “non-core” Italian and French business.
Barclays had to swallow a €500m loss when it sold its Spanish retail, corporate banking and wealth management businesses in Spain to Caixabank for about €800m last September. It has tried several times to pull out of France and Italy but struggled to find buyers.
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The bank considered increasing its exposure to Spain under its former boss, Bob Diamond, having examined bids for several struggling banks that were subsequently merged under Spanish government guidance.
Antony Jenkins, the recently ousted chief executive, was involved in expanding Barclays’ presence on the Continent in his time as head of retail banking. He bought credit card operations in Portugal and Italy.
McFarlane is desperate to cut costs. The bank faces restructuring costs of nearly £1bn over the next two years, as well as £5.5bn in charges for misconduct following the foreign exchange and Libor rate-fixing scandals. Profits are also a cause for concern as Barclays’ margin was just 3% last year, about half that of domestic rivals such as Lloyds.