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Barclays to sell UAE retail ops to ADIB for $177m

Abu Dhabi Islamic Bank said it would acquire 110,000 customers through the deal

Published: Updated:

Barclays has agreed to sell its retail banking operations in the United Arab Emirates to Abu Dhabi Islamic Bank (ADIB) for an expected price of 650 million dirhams ($177 million), ADIB said on Sunday.

The emirate’s largest Islamic bank said it would acquire 110,000 customers through the deal, helping it expand into serving expatriates, who comprise most of the population in the UAE. The deal is still subject to approval by the UAE's central bank.

Around half-a-dozen local and international banks, including Abu Dhabi Commercial Bank, Commercial Bank of Dubai, Citigroup and Standard Chartered, had expressed interest in buying the Barclays operations, according to banking sources.

The British bank had said last September that it would offload its retail portfolio in the UAE including credit cards, mortgages, personal lending and deposit-taking operations.

Some foreign lenders have been withdrawing from retail business in the UAE as they evaluate the reach of their operations following the global financial crisis, and in light of new Basel III rules on capital.

Foreign banks also face intense competition from local banks, which are enjoying a strong recovery of the UAE economy and real estate market; they have large pools of liquidity to deploy and have targeted retail banking for its higher margins compared with corporate business.

“The decision to exit the UAE retail banking space, while not taken lightly, allows us to focus on our businesses in corporate and investment banking and wealth and investment management,” John Vitalo, chief executive for Barclays in the region, said in a statement.

“These businesses are strong, performing well, and have significant future growth potential.”

ADIB’s net profit for the whole of 2013 grew 21 per cent to 1.45 billion dirhams; loans were up 21 percent to 61.7 billion dirhams, while deposits jumped 23 percent to reach 75.5 billion dirhams.

Islamic banking bans interest payments but involves structures that resemble them. Former Barclays customers will now be asked to convert their credit card accounts, deposits and customer loans into Islamic instruments at ADIB.

It is not clear that all of them will do so, although Islamic banking is a mainstream business in the Gulf and many customers bank with sharia-compliant institutions for business rather than religious reasons. ADIB will offer jobs to all Barclays retail employees and work with the British bank to ensure a seamless transition for customers, it said.

In 2010, Abu Dhabi Commercial Bank bought the UAE retail arm of Royal Bank of Scotland for around $100 million. That included three branches of RBS along with 250,000 customers.