Revamp aimed at sharpening focus on local ops: Barclays

Leading British lender Barclays Bank has said the restructuring at its India unit is a part of the efforts to put more focus on the local market, which it considers "very important in its global strategy".

The comment comes on the heels of bad press that the lender was getting in India in the recent weeks, as the restructuring process involves loss of jobs.

"We are very serious about our India operations and the ongoing restructuring of certain portfolios only shows our seriousness in sharpening our focus on this market further," Barclays Capital Asia Managing Director (Investment Banking) Helge Weiner-Trapness recently told PTI here.

The recast involves winding up of its SME division as cross-selling of investment banking and normal banking has not developed the way it was expected. Post-wind-up, the bank aims to sharpen its focus on lending to large corporates and MNCs, said a source familiar with the development.

Other foreign banks in India, such as Standard Chartered, Bank of America Merrill Lynch and Citi, have separate investment and corporate banking divisions in the country.

The move to shut down SME division also stems from the fact that Barclays has been facing competition from homegrown lenders such as HDFC Bank, Kotak Mahindra Bank and YES Bank in this segment.

Despite mounting losses, the recast does not cover retail business, which Barclays still considers as a priority. "Our retail strategy remains unchanged and we are committed to building the retail business franchise in this market," a source said.

In 2010, the proportion of retail banking NPAs to the total loan-book of Barclays stood at close to 10%.

According to an RBI report, Barclays' NPAs at Rs 1,422 crore were the second-highest among foreign banks in the country; just behind Rs 1,683 crore of HSBC. Barclays' non-priority sectors like credit cards and personal loans accounted for 91.3%, or Rs 1,298 crore, of bad loans.

It is normal among foreign banks to keep re-drawing their businesses. For instance, HSBC, which a few years ago was focusing on SMEs, scaled it down.

It wound up its retail banking subsidiary Pragati Finance a couple of years ago. Due to the RBI cap on opening new branches, even the retail focus of the largest MNC lender StanChart did not grow the way it wanted.

This April, the domestic arm of the largest German-lender Deutsche Bank sold its credit card business to the Hindujas-run IndusInd Bank for around Rs 300 crore after it failed to make money from this business.

According to sources, Barclays is also in talks for a possible sale of its SME business. Loans which come under the Rs 200-2,000 crore bracket are qualified under small and medium size loan segment.

It is learnt that Barclays is trying to sell its credit card business too, as losses are mounting.