UK private equity firm 3i tables bid for Barclays Infrastructure Funds Management

UK private equity firm 3i Group plc (LON:III) on Friday said it had put in an irrevocable bid to buy Barclays Infrastructure Funds Management Ltd (BIFM), the European infrastructure fund management business of Barclays Bank plc, without disclosing the value of the offer.

The deal is contingent on regulatory conditions, including the finalisation of an employee information and consultation process, the buyer said.

Through the takeover of BIFM, whose managed assets total some GBP780m (USD1.2bn/EUR910m), 3i delivers further on its plan to expand its infrastructure business and boost income from third party assets under management, the company said. The target complements 3i’s European infrastructure product offering, which is centred on core infrastructure, the buyer added.

BIFM, which has offices in London and Paris, currently manages two active unlisted funds that invest in public private partnership and energy projects in the UK and continental Europe.

Exxon mandates Barclays to find buyers for 30% stake in Hong Kong’s Castle Peak

US oil and gas giant Exxon Mobil Corp (NYSE:XOM) has mandated Barclays Plc (LON:BARC) to help it sell nearly half of its 60% stake in Hong Kong-based coal-fired power stations operator Castle Peak Power Co Ltd, informed people told Reuters.

According to the sources, Exxon has so far had no luck in its talks to divest the interest to CLP Holdings Ltd (HKG:0002) and state-controlled China Southern Power Grid as they had failed to reach an agreement on the valuation. CLP, which owns the other 40% in the business, is still eager to buy the offered stake as the operation brings guaranteed returns, one of the insiders said.

The auction could lure infrastructure funds, Japanese traders and sovereign wealth funds, the sources said, adding that first-round bids are expected in early April. They noted that the 60% interest was worth some USD3bn (EUR2.3bn) last March and half of it would be valued at nearly USD2bn, including a premium.

None of the parties commented to Reuters.

Dutch ING completes sale of UK online banking business to Barcalys

Dutch financial services group ING Groep NV (AMS:INGA) said on Wednesday it had concluded the sale of its UK-based online banking business ING Direct UK to Barclays Plc (LON:BARC) for a non-specified sum.

The divestment aligns with ING’s ongoing business portfolio review, serving its strategy to sharpen banking focus and enhancing its capital position, the vendor said.

Under the terms of the deal, announced in October 2012, ING had transferred GBP11.6bn (USD17.5bn/EUR13.4bn) of the unit’s savings and deposits along with GBP5.5bn of mortgages to Barclays.

The seller noted that the ING Direct subsidiaries in Australia, Austria, France, Germany, Italy and Spain are not affected by the transaction and neither is the ING Commercial Banking business in the UK.

The group went on to say it had recorded a combined loss of EUR260m (USD339m) as a result of the disposal, which is less than the previously expected EUR320m thanks to favourable market circumstances. The sale will result in a capital release of some EUR280m in the first quarter of the year, which in turn would positively affect ING Bank’s core Tier 1 ratio.

Aviva mandates Barclays to find buyers for Turkish insurance arm

UK insurer Aviva Plc (LON:AV) has picked Barclays Plc (LON:BARC) to assist it in selling its Turkish non-life insurance unit Aviva Sigorta AS, according to media reports today.

Aviva, which had announced a strategic review of its Turkish business in November 2012, refused to make a comment when approached by news agency Reuters..

According to one of the people, the sale process would be hard as the target has no banking distribution channel. Yet, Aviva Sigorta could attract buyers who are seeking small-medium assets.

Aviva Sigorta has a market value of TRY735m (USD416m/EUR311.4m), based on its stock price of TRY4.90 today.

Barclays announces job cuts and transformation plan

Barclays said today that it is aiming to transform its business after a series of scandals rocked the bank and the wider industry.

New chief executive Antony Jenkins, who took over from Bob Diamond in August, said that Barclays is aiming to become the ‘go-to’ bank for all of its stakeholders – customers and clients, colleagues, investors and wider society.

The transformation plan comes as the bank attempts to rebuild its reputation in the wake of last year’s fine for attempting to rig the Libor interest rate, and industry-wide mis-selling scandals in the UK involving payment protection insurance and interest rate hedging products.

Barclays announced today a drop in pre-tax profit to GBP246m in 2012, from GBP5.9bn in 2011, after the bank recorded a GBP4.6bn charge against the value of its own debt and set aside GBP2.45bn for the cost of mis-selling compensation.

Reflecting on a difficult year for Barclays and the entire banking sector, Antony Jenkins said: “The behaviours which made headlines during the year stemmed from a period of 20 years in banking in which the sector became too aggressive, too focused on the short-term, and too disconnected from the needs of customers and clients, and wider society. Barclays was not immune from the impact of these trends, and we suffered reputational damage in 2012 as a consequence.”

Change is needed both at Barclays and in the industry as a whole, the chief executive added.

Following a strategic review, Barclays said today that it is aiming to reduce costs by GBP1.7bn and will be cutting 3,700 jobs across the business. The job reductions will result in a restructuring charge of close to GBP500m in the first quarter of 2013.

Primarily the job cuts will be made in the bank’s investment banking activities in Asia and its retail banking business in Europe. Very few of the job losses are expected to be in the UK.

In the future, Barclays intends to focus on activities that support customers and clients in geographic markets and businesses where the bank has scale and competitive advantage. Specifically, it will focus investment in the UK, the US and Africa, while maintaining a presence across Europe and Asia to support its global investment banking franchise.

Barclays’ European retail operations will be restructured to focus on the mass affluent customer segment and it will close its Structured Capital Markets business unit.

Investors responded positively to Barclays’ announcements, with shares in the bank rising to a 23-month high earlier today, Bloomberg reported.

Barclays delays Bank Windhoek bid until Absa merger is completed

UK financial group Barclays plc (LON:BARC) said it had put off its bid to acquire a controlling stake in Namibia’s Bank Windhoek Ltd from financial services group Capricorn Investment Holdings Ltd until it finalised the merger of its African business with its unit Absa Group Ltd.

Namibia’s central bank gave the green light to the potential acquisition in June, after it had previously prevented Absa from buying at least 70% in Bank Windhoek over concerns about foreign dominance. The value of the proposed deal was not determined then. If successful, the purchase of Bank Windhoek’s stake would mark the British lender’s first step in the south-western African country.

Barclays Bank plc, part of Barclays, said on 21 August that it was in negotiations about a possible combination of most of its African operations with Absa. The proposal concerns the lender’s assets in Botswana, Ghana, Kenya, Tanzania, Uganda, Zambia and the Indian Ocean.

The operations have a combined workforce of some 8,000 people, a network of more than 400 branches and 750 ATMs serving some 2.2m customers. As at December 2011, the businesses concerned had total assets of around GBP6bn (USD9.7bn/EUR7.4bn).

Barclays Bank said previously that the success of the talks could not be guaranteed. If approved, the combination is seen to be completed no earlier than 2013. As part of the plan, Barclays Bank will remain a majority shareholder of the combined African operations and the listing of its subsidiaries in Kenya and Botswana will be preserved.

Dutch ING Bank sells UK online arm ING Direct to Barclays

Dutch banking group ING Groep NV (AMS:INGA) on Tuesday said it had agreed to shed its British online banking business ING Direct UK to Barclays Plc (LON:BARC), without disclosing the value of the transaction.

The move is part of ING’s ongoing business portfolio review, serving its strategy to sharpen banking focus, the vendor said.

The agreed terms call for ING to transfer ING Direct UK’s GBP10.9bn (USD17.5bn/EUR13.5bn) savings deposits and its GBP5.6bn mortgages to Barclays, with the buyer to integrate these operations into its retail and banking division in the UK.

In a comment, ING’s CEO Jan Hommen pointed out that ING Direct UK’s new owner will continue providing the same services to the unit’s 1.5m customers in the UK.

Set up in 2003, ING Direct UK has some 750 employees as at 31 August 2012.
Its current parent expects a capital release of around EUR330m and a transaction loss after tax of some EUR320m from the disposal, which it sees to have a neutral impact on its core Tier 1 ratio.

ING Bank will keep part of its UK investment portfolio worth EUR9bn as of 31 August 2012, while liquidating another part of it to facilitate the transaction. The deal will not affect the ING commercial banking operations in the UK, the vendor said.

Subject to regulatory approvals, the transfer if ING Direct UK’s operations is seen to complete in the second quarter of 2013.

Standard Chartered interested in buying Barclays Indian arm

Standard Chartered Bank India, a unit of British Standard Chartered Plc (LON:STAN), is leading a race to buy some INR25bn (USD438m/EUR351m) worth of retail operations of rival Barclays Plc (LON:BARC) in India, according to informed people cited today by the Economic Times.

An unnamed senior banker told the paper that Barclays is looking to exit the retail banking business and is selling its mortgage, personal loan and commercial banking assets, with some selected private and foreign banks looking at them.

Most foreign banks active in India have been facing pressure due to the economic decline derived from the credit crunch in 2008.

Barclays, which launched its consumer banking business in India in May 2007, was forced by non-performing loans to ease up on its expansion plans and reduce jobs in order to improve its performance in the country. The British bank cut 451 jobs in the year to March 2010, reducing its workforce in India to 1,083.

According to the Economic Times, Asia-focused Standard Chartered Bank wants to add Barclays’ Indian retail banking assets to its portfolio, after buying the rival’s credit card operations in December 2011.

An unnamed director of a consultancy firm which works with the two British banks told the paper that foreign banks in India had switched direction towards high-quality credit which produced increased income and stayed away from unsecured lending.

Standard Chartered Bank India has a portfolio including consumer, wholesale, small and medium-sized enterprises (SMEs), Islamic and private banking solutions.

The lender, former Chartered Bank, was founded in 1858 and is based in Mumbai.

99p Stores to expand

99p Stores are set to double in size with the help extended banking facilities of over £20m. Thanks to Barclay’s bank the high street retailer will be expanding into Ireland.

 

As a result, the retailer has moved all of its operational banking across to Barclays Corporate in recognition of the bank’s support for its ambitious growth plans.

 

The facilities will support the opening of between 40-50 new stores a year, the first of which have already opened the doors to customers in Letchworth, Stowmarket, Swindon, Weston-Super-Mare, Yeovil, Bishops Stortford and Colchester. The first of two Irish stores under the new brand ‘€uro 50 Stores’ opened in Dublin this morning and a second in Balbriggan is due to open later this month. A further 20 are planned in the next 12 months.

 

Glen McDonald, Relationship Director in Barclays Corporate’s Retail and Wholesale team said: “99p Stores and Family Bargains is a fantastic success story in what is a very challenging environment for retailers. The management’s ambitious growth plans to double the businesses’ size and expand overseas are testament to their success, and will ultimately create many new and much-needed jobs”.

 

Nadir Lalani, Chief Executive Officer, 99p Stores Limited said: “I am excited about moving to Barclays Corporate and look forward to working with them in the future as we continue to expand our businesses”.

 

99p Stores Limited, based in Swan Valley, Northampton, was founded by entrepreneur, Nadir Lalani, in January 2001. He opened his first store in Holloway, London and continued to open three further stores later that year. The company has enjoyed rapid growth and now has 150 outlets including 12 Family Bargains which offer a broader range of general merchandise including toys and soft furnishings.

Barclays cuts fixed rate mortgages by up to 0.41 percentage points

In its eighth rate reduction in a row Barclays yesterday made cuts of up to 0.41 percentage points to 60 per cent of its Woolwich fixed rate mortgage range.

The Great Escape fixed for two years at 75 per cent loan to value (LTV) sees the largest fall from 3.79 per cent to 3.38 per cent.

Substantial cuts of up to 0.36 percentage points will also take place for the second time this month at 80 and 85 per cent LTV on two and three year fixed rates. At 80 per cent LTV the two year fixed will reduce from 3.59 per cent to 3.38 per cent for customers who qualify for a Barclays Loyalty mortgage and 3.48 per cent for all other customers. At three years it will reduce from 4.13 per cent to 3.89 per cent. The 85 per cent LTV fixed for three years will fall from 4.49 per cent to 4.13 per cent. Cuts will also take place on the five year deals at these LTVs, meaning the cheapest five year we have available is 4.39 per cent (80 per cent LTV).

Other rate reductions include a two year fixed rate at 75 per cent (LTV), cut from 2.89 per cent to 2.79 per cent for customers who qualify for a Barclays Loyalty mortgage and 2.87 per cent for all other customers

Andy Gray, head of mortgages for Barclays, said “The mortgage market continues to be fiercely competitive which has been driven by falling swap rates. This is good news for borrowers as they have the opportunity to fix at a lower rate than they may currently be paying, to save them money now and protect them against future interest rate rises. We have also for the second time this month, made substantial cuts on higher LTVs, slashing around 0.80 percentage points off three and five deals. These changes give borrowers who have a smaller deposit access to even lower rates, making home ownership even more affordable, and helping those with existing mortgages to save money.

“Remortgaging has built momentum this year across the market and our latest Great Escape package is the best deal we’ve offered at 75 per cent LTV since we launched these in the Autumn of 2010. Thousands of borrowers with mortgages at this LTV can now fix well below their SVR rate without having to pay any switching costs, making substantial savings to their monthly mortgage payments.”

All our mortgage deals allow borrowers to remortgage using our ‘Switch and Save’ service which provides free legal work and a valuation or £200 cashback. For borrowers opting for Great Escape this allows them to switch their mortgage with no application fee, free legal work, free valuation and £300 cashback to cover the cost of their existing lender’s mortgage exit fees.

For further information on Woolwich mortgages from Barclays please visit www.barclays.co.uk/mortgages.