In sync with its efforts to simplify operations, Barclays PLC BCS completed the sale of its Wealth and Investment Management (WIM) business in Singapore and Hong Kong. The unit has been sold to Bank of Singapore Limited, the wholly-owned private banking subsidiary of Oversea-Chinese Banking Corporation Limited (OCBC).
The sale value of $225 million represented 1.75% premium to Barclays WIM Singapore and Hong Kong’s assets under management (AUM) at closure. However, this is below the price of $325 million, which was announced at the time of signing the deal in April.
Further, the pro forma decrease in risk weighted assets (RWAs) will be roughly £0.8 billion. This is also below the previously estimated decline in RWAs of approximately £0.9 billion.
So, these were perhaps the reasons for price fall since the announcement of completion of the deal. Barclays’ shares declined nearly 2.6% on Nov 28 to close at $10.38 per share. Notably, in the last three months, the company shares have surged more than 16%, outpacing the gain of 3.1% for Zacks categorized Foreign Banks industry.
The completion of the deal takes Barclays a step closer to its target to lower RWAs to £23 billion by 2017. Nonetheless, the company will continue to operate the corporate and investment banking businesses in Singapore and Hong Kong.
Jes Staley, Barclays Group CEO said, “I would like to thank those skilled and dedicated colleagues in Hong Kong and Singapore, who have moved to become part of Bank of Singapore, for their hard work for both Barclays and our Wealth clients in the region. I wish them great success in the future. Asia remains a crucial component of the Barclays business plan, and we continue to actively serve our clients across the region from our offices in Singapore, Hong Kong, China, India, and Japan.”
Barclays’ efforts to right size operations and vend off non-core businesses will lead to improved efficiency and profitability overtime. The company has been disposing off its non-core units across the globe with an aim to lower expenses.
Nonetheless, Barclays is not alone. There are many large banks, including Deutsche Bank AG DB, HSBC Holdings plc HSBC and Citigroup Inc. C that have been divesting non-core/unprofitable businesses globally.
Currently, Barclays carries a Zacks rank #3 (Hold).
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