No takers for Barclays credit card biz

MUMBAI: Barclays India , which has put its credit cards business on the block, is yet to find any taker, even though the bank has offered a huge discount, according to bankers who were approached for the sale.

The UK-headquartered bank, which is now scaling down its retail business in India after a pile-up of bad loans disbursed over three years ago before the slowdown in the economy, has also been restructuring its small and medium enterprises business. "Barclays' card business is being offered at a huge discount but there are no takers in the market," said the chief executive officer of a private sector bank who was offered the portfolio. A Barclays spokesperson in an email statement to ET said, as a global bank it keeps all its businesses under strategic review.

"We are reviewing options for cards, a business which requires scale and which may be able to achieve that scale under a new ownership," a spokesperson said.

According to banking industry estimates, Barclays has a card base of about 2.5 million. However, ET could not verify this number independently. In its annual report for 2010, Barclays had said it would focus on those areas where it can be top tier in the minds of clients and deliver good returns such as high net-worth business in wealth and equities and advisory business in investment banking.

Barclays, which launched its consumer banking operations with much fanfare in May 2007, saw a spike in non-performing loans on aggressive customer acquisition. The bank has been consolidating its consumer banking book since 2009. According to the last published financials, the bank has shrunk its advances book by 28.30% to 7,565 crore at the end of March 2010 against 10,551 crore in March 2009. Its net non-performing loans rose to 5.15% at the end of March 2010 compared with 4.59% last year, said the RBI publication profile of banks.

The bank has reduced its employee strength by 451 personnel to 1,083 executives at the end of March 2010 against 1,534 employees in the previous year. In 2007-08, the bank had around 2,078 employees, according to the data.

"For corporate banking, our focus is on the large corporate, MNC and financial institution customer base. As a result, the SME coverage currently conducted within corporate banking will reduce and wherever possible, the staff will be deployed elsewhere within Barclays," the spokesperson said. On the retail banking side, the bank said it will continue to focus on the mass affluent customers through a wide range of lending, deposit, investment and insurance products.

The bank's NBFC, Barclays Investments & Loans India, or Barclays Investments, is also reeling under losses. The bank, like other foreign banks, had floated the NBFC to improve its branch penetration. The NBFC offers unsecured loans, loans against shares and loans against property.

Crisil in its rating rationale on the NBFC said: "Barclays Investments' standalone credit risk profile is constrained by its weak asset quality and earnings profile. In the personal loans segment the 90+days past due loans were at a high level of 11% of advances as on December 31, 2010, albeit much improved from the peak levels of 18.1% as on December 2009."