Barclays PLC (LON:BARC) (NYSE:BCS) announced Tuesday, that it has agreed to buy the British savings and loan business of the Dutch firm ING Groep N.V. (NYSE:ING). The purchase highlights the shift in focus toward retail banking after the recent allegations, related to the rate rigging scandal, which led to the resignation of its former chief executive, Robert E. Diamond Jr. The organization is now headed by Antony P. Jenkins, who previously ran the bank’s retail banking operations.
Ashok Vaswani, head of the British retail and business banking unit of Barclays PLC (LON:BARC) (NYSE:BCS), said in a statement “The acquisition of ING Direct U.K. is a good fit with Barclays’s existing U.K. retail banking business”.
As per the terms of the deal, the British bank will acquire deposits of £10.9 billion ($17.5 billion), and mortgages worth of £5.6 billion, from ING Direct U.K. The mortgages will be acquired at a 3 percent discount, while the deposits will be acquired at par value. The purchase will help Barclay’s to add another 1.5 million customers to its existing 15 million client base. The business employs 750 people, and has call centers in Reading and Cardiff.
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Last week, Barclays PLC (LON:BARC) (NYSE:BCS) underwent a massive board reorganization of its investment banking unit, the same unit was the main culprit of the recent rate –manipulation case. With the new structure, Hugh E. McGee III, one of the firm’s top deal makers, will now serve as the senior corporate and investment banker in the Americas, and Eric Bommensath will now be responsible for combined fixed-income and equities sales and trading division.
ING Groep N.V. (NYSE:ING) has been disposing of its assets around the world, as part of a bailout from its local government during the financial crisis. In September, the Dutch bank offloaded 9 percent of its stake in Capital One Financial Corp. (NYSE:COF) through a public offering, worth around $3 billion.
The sale will result in a net loss of 260 million euros ($336 million) for ING, which is expected to be compensated by 330 million euros of extra capital that would be freed up when the deal is completed. The deal is expected to be completed by the second quarter of 2013. Sandy Chen, a bank analyst at Cenkos, said: “Although we think this is a good opportunistic acquisition for the UK retail banking business, it isn’t material in the context of Barclays’ £1.6tn balance sheet and £409bn of customer deposits”.