Barclays completes sale of UAE retail arm to ADIB

The Dh726m sale comes as the British bank reorganises its business following regulatory fines.

Barclays, the UK's second largest bank, said it had completed the sale of its UAE retail banking business to Abu Dhabi Islamic Bank. The £119 million (Dh726.4m) sale to ADIB, announced in April, comes as the British bank reorganises its business in the wake of regulatory fines and reduces assets in areas where it does not have a competitive edge.

The UAE divestment is limited to a portfolio of mortgages, unsecured credit and deposits, Barclays said, adding that it is committed to its other businesses in the country. At the same time, Barclays said that it sold its Spanish retail banking, wealth management and corporate banking business in Spain for €800m (Dh3.86 billion) to CaixaBank.

About 2,400 Barclays employees and 262 branches will be transferred to CaixaBank on completion of the sale, expected early next year following regulatory approvals, the bank said.

“We remain on track to rebalance Barclays as part of our strategy to deliver sustainable returns for our shareholders,” said Antony Jenkins, the Barclays chief executive.

ADIB, the biggest Sharia-compliant lender in the emirate, will take on about 110,000 extra customers from the purchase. London-based Barclays has been reducing assets and jobs to boost profits as it reels from the Libor interest-rigging scandal. Barclays and other banks involved in the scandal have been forced to pay billions of dollars in fines.

Banks in the UAE, of which there are more than 50, have been vying heatedly for retail customers since the financial crash of 2008 because the margins on that business are higher than loans to companies. And many of these corporates were struggling to recover from the crisis, making banks focus on individuals.

The sale to ADIB comes amid greater consolidation in the banking market, especially in the consumer divisions. Abu Dhabi Commercial Bank, which was reported to have expressed interest in Barclays, bought the retail arm of Royal Bank of Scotland in 2010 for about US$100m, adding more than 250,000 customers to its business. HSBC bought Lloyds’ retail arm in 2012 for $769m and Emirates Islamic merged with Dubai Bank to create Emirates Islamic Bank in 2012.

ADIB, which has the third largest retail network by number of branches and ATMs in the UAE, is not only trying to win a greater share of the thriving consumer banking market but is also striving to make Sharia-compliant banking, which prohibits interest and charges a profit rate instead, more attractive to non-Muslims. The bank recently hired Phil King, a veteran Citibank executive, to head the lender’s retail business and he is keen to make Islamic banking more accessible to western expatriates while keeping the bank’s existing local customers happy.

The number of active customers served by ADIB increased by 14 per cent in 2013 to 577,565.

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