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Barclays Plc to sell its Russian retail and commercial lending arm

Barclays Plc is planning to sell its retail and commercial lending operations in Russia. Barclays Plc wants to focus on its investment banking operations, reported Bloomberg. Barclays Plc chief executive officer Robert Diamond announced the plans Friday, after the bank announced its 2010 fiscal year results.

According to Diamond, Barclays is embarking on a strategy that will see its business in Russia focus on entities, large corporates and multinational. That effectively marks Barclay’s exit from its Russian retail business that was largely underperforming, said Diamond.

Barclays acquired Russian retail lender Expobank in 2008 for an estimated $745 million. However, the global economic crisis and the subsequent collapse of Lehman Brothers Holdings Inc pushed the economy into depression causing a fall in commodity prices.

Barclays announced its agreement to purchase, subject to regulatory approval, the investment-banking and trading divisions of Lehman Brothers, a United States financial conglomerate that had filed for bankruptcy in 2008.

At the time of the Russian acquisition, Barclays had hoped the Expobank investment would generate profit and achieve a return on investment considerably above the cost of equity by 2011.

Barclays Plc is the third largest bank in the UK. Barclays was the eighth-biggest underwriter of debt and equity in Russia last year, according to data compiled by Bloomberg.

Expobank focuses on Western Russia with branches in Moscow and St. Petersburg. Expobank has more than 400,000 clients and a network of more than 350 automated telling machines and local branches. It employs about 1,500 people.

In May 2010, Renaissance Credit, the consumer finance arm of Moscow’s Renaissance Group, reported it had agreed to acquire 14 Barclays’ branches. Barclays will strengthen its position in Russian capital market, focusing on corporate and investment banking, Diamond said on the call.

Barclays Plc is a global financial services company headquartered in London, United Kingdom. It has operations in over 50 countries and territories across Africa, Asia, Europe, North America and South America and around 48 million customers. As of 30 June 2010 it had total assets of €1.94 trillion, the third-largest of any bank worldwide (after BNP Paribas and HSBC).

However, Barclays already operates in Russia through its investment banking unit, Barclays Capital. The divestment will enable Barclays shift its business strategy in Russia to cut its largely underperforming operations in retail banking in the country.

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