THE NEW chief executive of Barclays tacked a course firmly towards retail banking on Tuesday with his first deal since replacing Bob Diamond – the takeover of ING’s British online savings and loans business.
Antony Jenkins, former head of Barclays’ retail banking operations, took the top job at the end of August after the Libor interest rate‑rigging scandal forced Diamond, an investment banker, to resign.
ING was ordered to sell several businesses under European Union state aid rules and put ING Direct UK up for sale in August. It has 1.5 million customers and employs 750 staff who will transfer to Barclays.
ING said it will book a loss of €260 million (£212m) on the sale, which effectively means it is paying Barclays £168m to take the business off its hands.
About 500 staff are based in Reading, with 250 in Cardiff, and Barclays said it was too early to say if there will be redundancies.
ING Direct UK, once highly competitive in its savings rates, has £10.9 billion of savers’ deposits and a mortgage book of £5.6bn.
Jenkins had already signalled his intention of focusing more on retail banking and less on riskier investment banking.
Vivek Raja, banking analyst at Oriel Securities, said: “To the extent that this deal signals Antony Jenkins’s revised strategic intentions and lower dependence on the investment bank, we view it as positive.” Another analyst commented: “A sound purchase, won’t frighten the horses.”
In the last week, Barclays has announced a shake‑up at its investment bank to cut costs and prepare for new regulations, and promoted two of the top consumer banking bosses.
Barclays said the ING acquisition was a good fit with its existing UK retail banking business, where it has about 15 million customers.
ING Direct UK was launched in Britain in 2003 with its distinctive orange lion brand, and was able to keep costs low because of its mostly internet operating model.
The deal will release about €330m of capital for the Dutch bank, which is also divesting its insurance operations among other assets to repay Dutch state aid received in 2008 and bolster its balance sheet.
It sold its Canadian online bank in August and is trying to sell its Asian investment management and insurance operations, a deal which could raise $7bn (£4.4bn) in total. It later plans to separately list its European and US insurance and investment management businesses.
Barclays said the ING Direct deal meets Jenkins’s target to deliver return on equity (RoE) above its 11.5 per cent cost of equity.
Barclays delivered an adjusted RoE of just under 7 per cent in 2010 and 2011, and Jenkins has promised to take “quick and decisive” action to get that up. He is assessing the bank in 100 parts and in February will unveil what areas he wants to keep, attempt to turn around, or divest.
The ING Direct deal adds to several others struck by Barclays in recent years to add retail customers, including purchases of Standard Life Bank in 2009 and credit card Egg last year.
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