Barclays may put Rs 3,000-cr India retail assets on block

Barclays Bank is expected to put its India retail assets on the block. The British lender has decided to focus on profitable business ventures such as wealth management and investment banking.

According to sources familiar with the developments, the bank may sell more than Rs 3,000 crore worth of retail assets in India comprising mortgage loans, personal loans and loans to small businesses. Barclays is currently restructuring its banking operations in India and has decided not to book new retail loans. It will, however, accept deposits from select clients while focusing on wealth management, corporate and investment banking services.

Barclays currently employs around 1,200 employees in its banking and non-banking finance operations in India. The restructuring may lead to around 20 per cent of its staff in these businesses losing their jobs. The group, which comprises investment banking, wealth management, banking and offshore services businesses, employs around 11,000 people in India.

Barclays has recently sold its India credit cards business to Standard Chartered Bank at a hefty discount. However, the foreign bank may a get a premium on its retail assets as most of these loans are backed by securities.

According to Reserve Bank of India data, Barclays' net non-performing asset ratio improved significantly to 1.46 per cent in 2010-11 from 5.15 per cent in the previous year. "Most of it is performing portfolio backed by adequate collateral," said a source requesting anonymity because of the sensitivity of the issue. Barclays closed the last financial year with Rs 8,311 crore of loans.

A spokesperson for the bank declined to comment if it was looking to sell its retail loans. "As part of our decision to consolidate and build a sustained profitable Indian business based on our competitive strengths, Barclays has decided not to book new retail loans... All existing loans will, of course, continue as normal," the spokesperson said in an emailed response.

According to sources, Barclays will retain its nine branches in India, which will be mainly used for servicing its high net worth clients and deposit-taking. "The deposits business will continue because it does not cost any capital. For loans, you need capital and unless you are able to reach a certain scale it does not make sense to continue the lending business," said a banker.

Barclays will now focus mostly on servicing large domestic companies, multinational firms and financial institutions and assist them in cross-border transactions.

Earlier this year, Barclays had closed its SME (small and medium enterprise) business that led to 25-30 people exiting the bank. In September, it merged the sales teams of its corporate banking and investment banking businesses to service its large clients in a more unified manner.