Barclays to Sell Italian Retail Banking Business to CheBanca! -- Update

By Giovanni Legorano in Milan and Max Colchester in London

Barclays PLC on Thursday said it agreed to sell its Italian retail business to CheBanca!, part of the banking group Mediobanca Banca di Credito Finanziario SpA, in the British bank's latest move to focus on its core operations.

The Italian group said it would pay EUR237 million ($251.6 million) for the business, which consists of 89 branches, although Barclays said it would book a loss of GBP200 million ($299 million) on the sale because the price was below the unit's its book value.

For Barclays, the deal represents its latest move to exit retail banking in continental Europe to focus on the U.K., U.S. and Africa, following a similar move in Spain last year and Portugal in September. The bank is also trying to sell its retail business in France, which is made up of around 70 branches.

For Mediobanca, the deal is part of its strategy to focus more on growing its CheBanca! retail network, along with its investment banking business and asset management arm. The emphasis on such areas comes after it decided two years ago to move away from a model of owning large stakes in prominent Italian companies, which had allowed it to play an outsize role in Italian industry.

Mediobanca said the purchase would grow CheBanca!'s client base by 40% to 770,000 clients and that its direct funding would rise 30% to EUR13.5 billion. It expects the acquisition to boost earnings after a year, as cost and revenue synergies start to bear fruit.

Barclays said the financial impact of the transaction depends on the balance sheet of the business at the time the deal closes and on foreign-exchange movements. Barclays estimates the sale will reduce its risk-weighted assets by about GBP800 million.

"This transaction is further evidence of the reshaping of Barclays Group to focus on our core businesses," new Chief Executive Jes Staley said. As well as the sale of retail operations in Europe, Mr. Staley, who started as CEO on Tuesday, is also pushing along plans for Barclays to shrink in investment banking.

Barclays will continue to operate investment banking and corporate banking in Italy. It is exploring further loan portfolio sales in Italy, according to a person familiar with the matter.

Margot Patrick and Rory Gallivan contributed to this article.

Write to Giovanni Legorano at giovanni.legorano@wsj.com and Max Colchester at max.colchester@wsj.com

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(END) Dow Jones Newswires

December 03, 2015 06:01 ET (11:01 GMT)

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