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Barclays (BCS) in Talks to Buy Metro Bank's Mortgage Loans

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Barclays (BCS - Free Report) has entered into advance talks to acquire a substantial residential mortgage portfolio from Metro Bank. This was first reported by Sky News.

This is part of the broader financial restructuring effort by Metro Bank and will bolster its capital levels. It must be noted that last month, the lender was on the verge of collapse and subsequently clinched a rescue deal that included £325 million in new funding and the refinancing of £600 million of debt.

Lloyds Banking Group plc, NatWest Group plc (NWG - Free Report) and HSBC Holdings (HSBC - Free Report) are some of the other potential buyers of this loan book. This £3 billion portfolio is a major portion of Metro Bank’s roughly £8 billion mortgage portfolio, which largely comprises homeowners in London and the southeast.

The deal, if announced with Barclays, is expected to close by the end of this year. The transaction is expected to complement the company’s acquisition of Kensington Mortgage earlier this year.

Further, in sync with its strategy to improve market share in the U.K., Barclays seems to have made a bid to acquire Edinburgh-based Tesco Bank. This was first reported by Reuters, citing persons familiar with the matter. Tesco Bank was formed in 1997 through a 50-50 joint venture between Royal Bank of Scotland (now known as NatWest Group) and Britain’s large food retailer Tesco Plc. In 2008, Tesco Plc took full ownership of the venture. Barclays is primarily interested in Tesco Bank’s credit card and savings account products. The deal offers an opportunity to cross-sell products to Tesco Plc’s huge retail customer base.

These apart, Barclays is looking at ways to trim expenses. Recently, Reuters reported that the company is planning to reduce costs by $1.25 billion (around 7% of total operating costs incurred in 2022) through the elimination of 1,500-2,000 jobs, specifically in its segment, Group Execution Services.

So far this year, shares of BCS have lost 8.5% on the NYSE against the industry’s 11% rally.

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Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, HSBC is looking to expand in Asia. In sync with this, last month, it announced a deal to acquire Citigroup's (C - Free Report) retail wealth management business in China.

As a result of the sale, Citigroup will transfer assets under management and deposits worth almost $3.6 billion (as of August 2023) and the associated wealth customers in 11 major cities to HSBC Bank China. Upon completion (expected in the first half of 2024), the acquired business will become part of HSBC Bank China’s Wealth and Personal Banking operations. Citigroup will retain its institutional businesses where it has a preeminent position.

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