Barclays Plc agreed to sell its retail banking business in the United Arab Emirates to Abu Dhabi Islamic Bank PJSC for 650 million dirhams ($177 million) as the U.K.’s second-biggest lender by assets shrinks its business.
Abu Dhabi Islamic Bank said it will add 110,000 customers and absorb all of Barclays’ U.A.E. retail staff following the transaction, according to a statement to the local stock market today. The deal is subject to regulatory approval.
The sale comes as Antony Jenkins, who replaced Robert Diamond as Barclays’ chief executive officer in 2012, tries to rein in pay and boost earnings to help restore investor confidence after the lender was fined for manipulating interest rates. The London-based bank plans to eliminate 12,000 jobs to curb costs after its fourth-quarter profit declined.
The decision to sell the U.A.E. retail assets “while not taken lightly, allows us to focus on our businesses in corporate and investment banking and wealth and investment management,” John Vitalo, Barclays’ CEO for the Middle East and North Africa, said in the statement. “These businesses are strong, performing well, and have significant future growth potential.”
Barclays joins Royal Bank of Scotland Group Plc, Britain’s biggest government-owned lender, and Lloyds Banking Group Plc in exiting consumer and commercial-banking business in the U.A.E. as part of cost-cutting plans. HSBC Holdings Plc bought Lloyds operations for $769 million in 2012, while Abu Dhabi Commercial Bank PJSC acquired RBS retail banking assets in 2010.
Abu Dhabi Islamic Bank, the second-biggest Shariah-compliant lender in the U.A.E., said the deal to buy Barclays’ operations “is a perfect fit” as it expands into the expatriate market segment. The Gulf nation has a population of 8.3 million of which about 80 percent are expatriates.
The U.A.E., the second-biggest Arab economy, has the biggest banking market in the six-nation Gulf Cooperation Council that also includes the biggest Arab economy Saudi Arabia and Qatar. The country has 51 operating banks, including the local units of Citigroup Inc. and Standard Chartered Plc.
Abu Dhabi Islamic Bank shares fell 0.6 percent to close at 7.03 dirhams today, trimming their advance this year to 54 percent. That compares with a gain of 16 percent for Abu Dhabi’s benchmark ADX General Index.