Following the completion of strategic review of its retail operation in the United Arab Emirates (UAE) in Sep 2013, Barclays PLC ( BCS ) has announced a divestiture of the same. The retail banking business is being acquired by Dubai-based Abu Dhabi Islamic Bank (ADIB) for £107 million ($177 million).BARCLAY PLC-ADR (BCS): Free Stock Analysis ReportHSBC HOLDINGS (HSBC): Free Stock Analysis ReportROYAL BK SC-ADR (RBS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research
Notably, the deal is expected to close in the coming quarters. At present, the acquisition awaits the approval of UAE Central Bank. Notably, all of Barclays' employees will be retained by ADIB. Nevertheless, Barclays will continue to focus on its Corporate and Investment Banking and Wealth and Investment Management operations in UAE.
Following closure of the transaction, Barclays' customers will get assess to a wide range of financial products. These products and services include current accounts, home finance, personal finance, auto finance, education and travel finance as well as co-branded cards with Etihad and Etisalat.
ADIB has been trying to expand the expatriate market segment. Hence, the deal is a strategic fit for ADIB as it will add 110,000 customers (mostly expatriate workers).
Barclays is not the only global bank to vend its UAE retail operations. In 2012, Lloyds Banking Group plc ( LYG ) sold its onshore retail, corporate and commercial banking business in the UAE to HSBC Bank Middle East Ltd, an indirect wholly owed subsidiary of HSBC Holdings plc ( HSBC ). Further, in 2010, The Royal Bank of Scotland Group plc ( RBS ) divested its retail unit as well as small and medium enterprise businesses to Abu Dhabi Commercial Bank.
To remain profitable in the present volatile economic environment, Barclays' decision to divest the UAE retail business appears to be a right move. The bank has also been striving hard to cut costs and improve efficiency in core operations.
Currently, Barclays carries a Zacks Rank #3 (Hold).