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Barclays Possible Disposal; Could Be Minor Credit And Capital Positive

FINANCIALS

Barclays (BARC LN) talks to sell UK merchant payments business re-emerge; could be minor credit positive, if occurs.


  • BBG reported in Sep-23 that the bank was looking at selling a minority stake in Barclays Merchant Services, to try to boost its flagging share price, talks apparently stalling later in the year.
  • Reuters now reporting the bank to be exploring partnerships for the business, alongside selling as much as 80% of the business. These businesses tend to be very “capital light” so a sale tends to enhance CET1 ratios – positive for all concerned. However, this is still somewhat speculative.
  • Barclays’ equity continues to trade as a discount to peers (fwd PE of 4.7x vs. peers on 6.4x and fwd P/B of 0.41x vs. peers on 0.81x, for examples) and activists have been lobbying for the group to streamline and/or sell businesses.

Barclays 5yr CDSs traded at 78.9 (Jan-24 avg), meaningfully wider than the Eurobank average (of 57.7) and only tighter than Deutsche (at 80.5).

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