) announced completion of the strategic review of its retail
operation in the United Arab Emirates (UAE). Following the
review, the company has decided to divest its retail business in
the country, which will lead to a loss of up to 280 jobs.
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Though not officially confirmed, the business unit will likely be
bought by a local bank. Banks in the country are keenly seeking
to expand at present.
As confirmed by Barclays, it will maintain its branches in Dubai
focusing primarily on its comparatively productive corporate and
investment banking as well as wealth and investment management.
The company's profitable retail business units in Egypt were not
under consideration for review.
As reported by Reuters last month, this divestment was on the
cards. Barclays, like other foreign banks, has been bracing a
stringent regulatory environment in the UAE. After the recent
financial crisis, foreign banks are finding it difficult to
compete with well-capitalized local banks in the country.
Moreover, Barclays intends to slash 3,700 jobs, restrain senior
bankers' remuneration and close unproductive business units
across the globe to save $2.6 billion annually.
Barclays is not the only global bank to vend its UAE retail
operations. Over the last few years, there have also been
divestitures by other global banks. In 2012,
Lloyds Banking Group plc
) vended 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
). Additionally, in 2010,
The Royal Bank of Scotland Group plc
) divested its retail unit as well as small and medium enterprise
businesses to Abu Dhabi Commercial Bank.
We may infer that though the global economy is improving, it
continues to be volatile. Hence, financial institutions such as
Barclays are forced to reduce costs in order to enhance
profitability and comply with the stringent regulatory
requirements. Its latest decision to offload its UAE retail
business will help it save costs as well as focus more on core
Currently, Barclays carries a Zacks Rank #3 (Hold).