Barclays Contemplates Divestment of a Segment of its UK Payments Operations

06 Sep, 2023

Barclays Contemplates Divestment of a Segment of its UK Payments Operations

Barclays, the British banking institution, is reportedly exploring the possibility of divesting a portion of its payments business. According to undisclosed sources cited by Reuters on Monday, September 4th, the bank is contemplating selling a stake in its merchant payment processing unit. While Barclays is considering partnering with an entity possessing expertise in expanding this business and raising capital, the exact extent of the potential sale remains undetermined.

The estimated value of this payments business is believed to be at least $2.5 billion, as per the report. A spokesperson for Barclays provided a response in line with their previous stance, stating, "We don't comment on speculation." This statement echoes the bank's stance from June when there were reports about the bank exploring significant changes to its payments operations, including the possibility of expansion or merging with external providers.

This development aligns with a broader trend in the banking sector, where major institutions are divesting parts of their operations. An example of this trend is Goldman Sachs' sale of its personal finance business to investment advisor Creative Planning in August.

Barclays is part of a consortium of major players in the financial sector that established the Fintech Growth Fund, a $1.2 billion investment fund aimed at fostering the growth of fintech in the United Kingdom. This consortium includes challenger banks focused on consumers, payments technology companies, financial infrastructure providers, and regulatory technology firms. The fund is being advised by the UK investment bank Peel Hunt, with a primary focus on supporting growth-stage firms.

The creation of the Fintech Growth Fund is a response to a government-commissioned review that examined whether the UK's listing environment was discouraging for tech companies. There had been criticisms that the UK posed barriers to fintech entrepreneurs, especially after its departure from the European Union. This fund is designed to address these concerns and encourage fintech firms to consider listing in the UK rather than seeking listings abroad. The London Stock Exchange has already committed to various reforms to attract fintech companies to list in the UK, further promoting the country's fintech ecosystem.