Barclays Plc is conducting a strategic review of its retail banking operations in the United Arab Emirates which could lead to a sale of the business, according to two sources familiar with the matter.
Britain’s fourth-largest bank by market value confirmed on Tuesday it was holding the review of the UAE retail business but did not provide any further comment.
The sources spoke on condition of anonymity as the matter is not public.
Under Chief Executive Anthony Jenkins, Barclays is axing at least 3,700 jobs, reining in pay of senior bankers and closing businesses across the group in the face of new regulatory curbs on risk.
Since taking the top job in August 2012, Jenkins has halted speculative trading in agricultural commodities and closed a profitable tax advisory unit.
Foreign banks in the United Arab Emirates face increased competition from local lenders that are cash-rich and do not face the same capital issues as their Western counterparts.
They can lure top talent from international banks and are offering more sophisticated banking services to clients.
The industry is crowded - the UAE central bank’s website lists 51 commercial banks operating in a country of about 8million people, 23 of them local banks and 28 foreign lenders.
Some British banks have already exited retail banking in the Gulf state. In 2010, Abu Dhabi Commercial Bank, a part state-owned lender, bought the retail banking operations of Royal Bank of Scotland in a $100 million deal.
HSBC Holdings bought Lloyds Banking Group’s onshore retail, corporate and commercial banking business in the UAE last year.
Barclays’ retail banking operations in the UAE include its personal banking, lending and mortgage services and a credit card business.
The bank has between 500 and 1,000 staff in retail banking but most are outsourced employees and not part of the bank’s direct payroll, one banking source said.
The source said any sale was most likely to interest local banks in the region.
“You would expect the local banks to be the most likely buyers of retail banking business in the region. We have seen that in the past and most of them are in an expansion mode,” the source said.
The internal review is still at a preliminary stage and no decision has been made on the outcome of the study, the sources said.
No outside consultants or financial advisers have yet been hired to find potential buyers.
Barclays’ corporate banking, private banking and investment banking activities in the UAE are not part of the review, according to the sources.
In the Middle East, Barclays has retail banking operations in Egypt aside from the UAE.
The review also does not encompass the bank’s Egyptian retail operation, which is a much larger and profitable business than in the UAE, according to the sources.