Barclays Eyes US Expansion

U.K. bank Barclays is considering whether it should expand further into the U.S. According to The Wall Street Journal, Barclays is considering the move due to pressure from activist shareholder Sherborne Investors. Other possibilities include rolling out its U.K. payments platform in the states, as well as building a U.S. checking account offering. In addition, sources say that Barclays is putting more capital behind its U.S. credit card operations.

Many European banks have to tried to expand into the U.S., with some of the biggest financial institutions (FIs) almost collapsing due to exposure to the U.S. housing market during the last recession. But a strong economy has made the U.S. more attractive to European lenders.

“Given competition, you have to continue investing in the U.S. to stay relevant on a global scale,” said Magdalena Stoklosa, managing director and European head of Banks and Diversified Financials Research at Morgan Stanley.

For its part, Barclays didn’t retreat during the recession. Instead, it acquired a chunk of Lehman Brothers during its collapse. Since then, it launched an online lender in Delaware, which collects term deposits to fund its large U.S. credit card business.

Last year, the U.S. accounted for 40 percent of the bank’s profits, and around a fifth of the bank’s capital is allocated to the country. In addition, the bank recently passed U.S. stress tests and has completed $12.5 billion of deposits to its Delaware operation.

A final decision hasn’t been made, but there is no word on timing. One move Barclays won’t be making is any big U.S. deals. The bank had looked into a  bigger U.S. retail banking presence a decade ago, but ultimately decided it didn’t make sense to purchase a lender with an extensive number of brick-and-mortar branches.

Part of Barclay’s interest in the U.S. now has to do with pressure from Sherborne, which wants capital moved away from Barclays’s investment bank trading operations. Sherborne took a 5 percent stake in Barclays earlier this year.


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