24 January, 2010

Great Britain Bank Mergers & Acquisitions (Barclays)

Photo: Musicians are seen performing outside a Barclays branch in Whitby, North Yorkshire, on a summer weekend. Photo was taken in September 2007.

Barclays plc

Barclays Bank can trace its history back to 1690 when two London goldsmiths named John Freame and Thomas Gould started a private bank to offer loans and safety deposit services for wealthy merchants. In 1736, James Barclay, who had married John Freame's daughter, became a partner. This was the first time the name Barclay became associated with the bank.

In 1896, 20 such private banks led by the Barclay and Company amalgamated into a joint-stock bank called Barclay & Co. Ltd. with 182 branches. Barclays acquired the London Provincial and South Western Bank in 1918, becoming one of Britain’s Big Five banks. In doing so, it inherited that bank’s ownership in the Colonial Bank, a British overseas bank founded in 1836 that had a near-monopoly in the Caribbean for much of the 19th century and also operated in British West Africa (Nigeria).

In 1925, following its acquisitions of the ailing National Bank of South Africa, Barclays restructured its various overseas holdings Colonial Bank, Anglo-Egyptian Bank and National Bank of South Africa into Barclays (Dominion, Colonial, and Overseas). Anglo-Egyptian Bank, of which Barclays had owned a majority interest since 1921, had operations in Egypt, Gibraltar, Malta, Sudan and Palestine. In 1954, Barclays (Dominion, Colonial & Overseas) was renamed Barclays (D.C.O.). In 1971, it became Barclays Bank International.

Barclays Bank pioneered the first credit card in Britain when the Barclaycard was launched in 1966. One year later, the bank installed the world's very first ATM bank machine, allowing clients to withdraw cash outside of a branch and during off hours.

In 1968, Barclays, Lloyds and Martins Bank announced a three-way merger that would have created a mega bank with 45% of the total deposits in England. At this point the British Monopolies Commission intervened and vetoed the merger plan. But in 1969, Barclays came back again and acquired Martins Bank, which was approved by the government. The acquisition further strengthened Barclay's position as one of U.K.'s largest financial institutions.

Throughout the 1970s and 1980s, political pressure from the now independent nations in the Caribbean and Africa led to the divestments of a number of local operations by Barclays, which became the now locally-owned Republic Bank in Trinidad and Tobago, the Union Bank of Nigeria, the Guyana Bank of Trade and Industry, the National Commercial Bank Jamaica and the First National Bank in South Africa etc.

In 1986, in preparation of the deregulation of the British securities market, Barclays Merchant Bank, de Zoete & Bevan and Wedd Durclacher Morduant & Co. merged to form Barclays de Zoete Wedd (BZW), a new investment banking concern. BZW subsequently was re-organized into today’s Barclays Capital.

Recent transaction(s):

  • In 1996, Barclays bought San Francisco-based Wells Fargo Nikko Advisers and merged it with its own BZW Investment Management unit to form what became Barclays Global Investors. Barclays Global Investors was divested in 2009 to BlackRock (see later entry).
  • In 2000, Barclays bought British mortgage lender Woolwich for GBP 5.40-billion (USD $8.10-billion).
  • In 2003, Barclays bought Spain's Banco Zaragozano for Eur 1.14-billion.
  • In 2005, Barclays acquired 60% of South African bank Absa for GBP 2.90-billion (USD $5.60-billion).
  • In 2007, Barclays bought U.S. sub-prime mortgage lender EquiFirst Corp. from Regions Financial for USD $76-million (GBP 38.7-million). The purchase price was lowered from the original USD $225-million due to the U.S. sub-prime meltdown.
  • On 2007-04-23, Barclays and Netherlands' ABN AMRO Holding NV agreed to merge in a deal that valued ABN AMRO at Eur 67.0-billion (GBP 45.4-billion, USD $91.0-billion). However, the Barclays-ABN AMRO merger proposal died in October when The Royal Bank of Scotland, Belgium's Fortis and Spain's Banco Santander won ABN AMRO with a Eur 70.0-billion (USD $101.1-billion) cash-and-stock offer. Click here for a detailed account of the battle for ABN AMRO.
  • In 2008, Barclays agreed to buy Russia's ExpoBank for GBP 373-million (USD $745-million) from Petropavlovsk Finance. ExpoBank operated 32 branches in Moscow and St. Petersburg, and had one of the biggest ATM networks in Moscow. This was Barclays' first foray into the Russian retail banking market.
  • In June 2008, Barclays raised GBP 4.469-billion (USD $8.79-billion) to replenish its capital reserve depleted by the global credit crisis, as well as to prepare the bank for future expansion. The massive stock sale was subscribed by the Qatar Investment Authority (GBP 1.764-billion), Sheikh Hamad Bin Jassim Bin Jabr Al-Thani's Challenger Universal Ltd. (GBP 533-million), Japan's Sumitomo Mitsui Financial (GBP 500-million), China Development Bank (GBP 136-million), Singapore's Temasek (GBP 200-million) and other institutional and private investors (GBP 1.336-billion).
  • Also in 2008, Barclays sold its life insurance unit Barclays Life to Swiss Reinsurance Co. (Swiss Re) for GBP 753-million (CHF 1.55-billion, USD $1.47-billion, Eur 951-million). The unit sold had 760,000 life insurance and pension policies and annuity contracts, representing GBP 6.8-billion in invested assets.
  • In September 2008, Lehman Brothers Holdings Inc. went bankrupt after both Barclays and Bank of America walked away from rescuing it. Barclays, however, returned a few days later and acquired Lehman Brothers' North American investment banking, fixed-income and equities sales, trading and research divisions at a fire-sale price of USD $250-million (GBP 140-million). The divisions employed about 10,000 people. Barclays also acquired Lehman Brothers' mid-town Manhattan head office building and two data centres for another USD $1.5-billion (GBP 843-million). During the height of the stock market and real estate boom in early 2007, Lehman Brothers had a market value of USD $45-billion. Lehman's risky mortgage portfolios and credit default swaps derivatives were not part of the sale to Barclays.
  • In 2008, Barclays bought the Italian residential mortgage business of Australia’s Macquarie Bank. Financial terms were not disclosed but the mortgage portfolio had an outstanding balance of Eur 1.1-billion (GBP 884-million, USD $1.41-billion).
  • In October 2008, Barclays raised GBP 7.05-billion in new capital from Middle Eastern institutional investors, after Britain’s FSA demanded various British banks to raise an additional GBP 25-billion in capital.
  • In February 2009, Barclays bought a small Indonesian bank called PT Bank Atika.  Atika had assets of GBP 54-million and 10 branches.
  • In April 2009, Barclays agreed to sell its iShares exchange-traded fund (ETF) unit to private equity firm CVC Capital Partners Ltd. for USD $4.4-billion (GBP 3.0-billion). The sale was part of Barclays’ aim to bolster its capital reserves to avoid a government bailout. iShares had GBP 266-billion under management as of 2008-12-31, and was the largest exchange traded fund manager in the world.
  • In June 2009, Barclays rescinded the agreement to sell its iShares ETF unit to CVC Capital Partners Ltd., and reached a new agreement to sell the entire Barclays Global Investors to BlackRock for USD $13.5-billion (GBP 8.2-billion). Under the deal, Barclays would receive USD $6.6-billion in cash and USD $6.9-billion of BlackRock shares. The bank would end up holding a 19.9% economic interest in the newly-named BlackRock Global Investors, but only a 4.9% voting stake. Barclays then paid a USD $175-million break fee to CVC Capital Partners. The unit sold by Barclays managed USD $1.5-trillion of assets. When the deal completed at the end of 2009, the value was revised to USD $15.2-billion (GBP 9.5-billion) due to a rise in BlackRock share prices. 
  • In September 2009, Barclays bought Citigroup's Portuguese credit card business with 400,000 accounts and EUR 644-million in receivables. Terms were not disclosed.
  • In October 2009, Barclays bought the banking assets of Standard Life plc for GBP 226-million (USD $369-million) to expand its British savings and mortgage business. Standard Life Bank had GBP 5.5-billion of deposits and GBP 8.8-billion of mortgage loans.
  • In February, 2010, Barclays bought Citigroup's Italian credit card operations with 197,000 accounts and EUR 234-million (GBP 204-million) in receivables. Terms were not disclosed.
  • In June 2010, Namibia's central bank blocked Asba Bank's attempt to buy 70% of Capricorn Investment Holdings for NAD $1.5-billion (USD $185-million) on concerns that the last locally-owned Namibian bank would into Anglo-South African control. Asba was majority-owned by Barclays. Capricorn Investment owned 72% of Namibia's Bank Windhoek (with 39 branches) as well as 88% of Botswana's Bank Gaborone.
  • In March 2011, Barclays bought Egg's credit card operations with 1.15-million accounts and GBP 2.3-billion in receivables.
  • In October 2011, Barclays sold its Russian retail and commercial banking operations to an investor group led by Orient Express Bank's owner Igor Kim. Financial terms of the deal were not announced but the price is said to be much less than the GBP 373-million that it paid for ExpoBank in 2008.
  • In May 2012, Barclays sold its 19.6% stake in BlackRock for USD $6.1-billion (GBP 3.95-billion) in order to boost its capital.
  • In October 2012, Barclays bought ING Direct UK from ING Groep.  ING Direct UK had 1.5-million customers, GBP 10.9-billion of deposits and GBP 5.6-billion of mortgage loans. Terms were not disclosed.
  • In February 2013, Barclays and its 55.5%-owned South African-based subsidiary Absa Group Ltd. reached an agreement under which Barclays would sell its operations in eight African countries outside of South Africa to Absa Group in exchange for 129.5-million new Absa shares.  The all-stock deal was worth USD $2.1-billion (ZAR 18.53 billion, GBP 1.35-billion) and would raise Barclays' stake in Absa Group from 55.5% to 62.3%.  Barclays had previously blocked Absa from expanding in other African countries outside of South Africa, where Barclays also had direct operations.  If approved by Absa's minority shareholders, Absa would be re-named Barclays Africa Group Ltd. following the transaction. The combined operations would have 43,000 employees serving 14.4-million customers through 1,300 outlets and 10,400 ATMs.
  • In May 2014, Barclays announced that it would significantly scaled back its FICC (fixed income, currencies and commodities) trading arm and cut 7,000 more jobs in addition to the 12,000 announced earlier. 
  • In August 2014, Barclays sold its Spanish retail banking, wealth and investment management and corporate banking operations to local rival CaixaBank for EUR 800-million (GBP 630-million, USD $1.05-billion). The business sold in Spain included 550,000 clients, 262 branches and 2,400 employees.
  • In September 2015, Barclays sold its Portuguese retail banking and insurance units to Spain's Bankinter SA and Bankinter Seguros de Vida, S.A. Seguros y Reaseguros (“Bankinter Vida”) for EUR 175-millin (GBP 127-million).  The units sold included 84 branches and 1,000 employees. Barclays would maintain its Barclayscard, investment banking and multinationals corporate banking operations in Portugal.
  • In February 2016, Barclays announced that it would exit Africa by selling its entire 62.3% stake in Barclays Africa Group by 2019 to re-focus on the British and American markets.  Barclays Africa Group's head office is in South Africa and owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Barclays Bank Tanzania and National Bank of Commerce), Uganda and Zambia; it also has insurance operations in Botswana, Mozambique, South Africa and Zambia. The group has over 1,200 branches and employs 42,000 employees; its most significant subsidiary is ABSA Bank in South Africa and Namibia. Barclays and its predecessor banks had operated in Africa for well over a century.
  • In April 2016, Barclays sold its wealth and investment management business in Singapore and Hong Kong to Singapore's Oversea-Chinese Banking Corp. for USD $228-million. The price was lowered from USD $320-million due to a drop of assets under management from the original estimate.
  • Also in April 2016, Barclays sold its Barclaycard consumer payments business in Spain and Portugal to Banco Popular-e, a Spanish on-line bank 51% owned by Varde Partners and 49% owned by Banco Popular Espanol.
  • In May 2016, Barclays sold a 12.2% stake in Barclays Africa Group Ltd. (BAGL) for GBP 603-million (ZAR 13-billion). Following this sale, Barclays' stake in BAGL fell to 50.1%.
  • Also in May 2016, Barclays sold its bullion vault in London to ICBC Standard Bank for an undisclosed amount. The bullion vault is said to have capacity for 2,000 tonnes of precious metals such as gold, platinum and silver. ICBC Standard Bank is 60%-owned by the Industrial & Commercial Bank of China and 40% owned by South Africa's Standard Bank.
  • In June 2016, Barclays sold its Spanish pension assets and liabilities to Vidacaixa, S.A.U. de Seguros y Reaseguros, a member of the Caixa Group.
  • In August 2016, Barclays sold its Barclays Risk Analytics and Index Solutions Ltd. (BRAIS) to Bloomberg L.P. for approximately GBP 615-million.
  • Also in August 2016, Barclays sold its Italian retail banking network to CheBanca!, a member of the Mediobanca Group. 
  • In October 2016, Barclays sold Barclays Bank Egypt") to Attijariwafa Bank S.A. Barclays Bank Egypt had 56 branches and 1,500 employees.
  • In December 2016, Barclays sold its French retail banking business to AnaCap Financial Partners. The operations disposed had a network of 74 branches,
  • In May 2017, Barclays sold another 33.7% of Barclays Africa Group Ltd. (BAGL) for GBP 2.22 billion (ZAR 37.7-billion, USD $2.83-billion). Barclays further planned to contribute 1.5% of BAGL to a black economic empowerment scheme, leaving Barclays with approximately a 15% long-term stake in the African bank.

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