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Barclays is selling a bulk of its Portuguese assets - but the deal will lose it £200 million

Lianna Brinded   

 Barclays is selling a bulk of its Portuguese assets - but the deal will lose it £200 million
Finance3 min read

ronaldo

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Cristiano Ronaldo of Portugal is stunned as he receives a yellow card from referee Jorge Larrionda during the 2010 FIFA World Cup South Africa Group G match between Ivory Coast and Portugal at Nelson Mandela Bay Stadium on June 15, 2010 in Port Elizabeth, South Africa.

Barclays is selling up in Portugal.

The British bank just confirmed in a regulatory statement this morning that it will sell a bulk of its corporate banking businesses in Portugal Spain's Bankinter and its insurance business to Bankinter's subsidiary Bankinter Vida.

Barclays did not put numbers to the deal in the statement but Reuters cited €175 million (£128 million) and €100 million (£153 million) for the two deals, respectively.

Barclays said it was not exiting the Portugal market completely as it will continue to operate Barclaycard, investment banking and multinational corporate banking in the country.

The move falls in line with Barclays Chairman John McFarlane's turnaround plan to reduce the bank's risky asset holdings and cut costs.

Barclays said the current estimate of the transaction will result in a major decrease of £1.7 billion ($2.6 billion) on completion of the deal and improve its balance sheet. However, this will be accompanied with a loss after tax of approximately £200 million ($305 million). It added that this loss will be booked in its third quarter results.

The bank said when the deal goes through 1,000 Barclays banking and insurance employees, and 84 branches, will transfer to Bankinter and Bankinter Vida.

"I am pleased to be announcing further reductions in Barclays Non-Core through the transactions announced today. We remain on track to rebalance Barclays as part of our strategy to deliver sustainable returns for our shareholders," said John McFarlane, Barclays Chairman, in a statement.

"We will continue to operate our Barclaycard, investment banking businesses and service our multinational corporate clients in Portugal. We believe these are areas where we continue to have a competitive advantage."

At the beginning of July this year, McFarlane ousted CEO Antony Jenkins as part of his bigger plan to shake-up the bank. This includes a masterplan to change incumbent management, reduce costs, and improve its capital performance.

"Arriving at Barclays with a fresh perspective, it is evident that we have a standout brand with first-class retail, commercial and investment banking businesses. Nevertheless, we are leaving value on the table and a new approach is required. As a Group, if we aspire to bring shareholder returns forward, we need to be much more focused on what is attractive, what we are good at, and where we are good at it," he said at the time.

"We therefore need to improve revenue, costs and capital performance. We also need to become more externally focused and deal with the internal bureaucracy by becoming leaner and more agile. I have experienced good results in dealing with these matters elsewhere," he added.

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