Barclays Brexit contingency plans are beginning to take shape as the bank prepares for the United Kingdom’s departure from the European Union. With a banking history stretching back centuries and a significant credit card presence across Europe, Barclays’ decision to expand its Irish operations demonstrates how financial institutions are preparing for uncertainty surrounding their ability to serve European customers after Brexit.
The planned restructuring would place Barclays’ European branches under Barclays Bank Ireland, including corporate, investment, and private banking operations as well as its Barclaycard credit card business in Germany. The move reflects a broader trend among British banks that are establishing or expanding European Union operations rather than waiting for the final outcome of Brexit negotiations.
Barclays has a storied history in credit cards, ranging from being one of the first non-US bank card issuers to its global presence. With roots in London dating back to 1690, and strong presence across central Europe, the shift to Ireland is a significant sign of the world to come as the UK exits from the European Union.
- The move shows Barclays putting its Brexit contingency plans into action, in common with other banks which are not waiting for the outcome of negotiations over how financial services will operate after Britain leaves the EU in March.
- The British bank outlined plans to expand its EU-based Irish entity in a slide presentation to investors earlier this month, saying the unit would primarily consist of Barclays corporate, investment and private banking activities and its Barclaycard credit card business in Germany.
- In addition to the French, German, and Spanish branches, Barclays will ultimately move all of its European branches under control of Barclays Bank Ireland, one of the sources said.
UK Banks Prepare European Operations for Brexit
Barclays is certainly not alone.
- Barclays rival HSBC (L) has begun shifting direct ownership of its European branches from its British entity to its French subsidiary, while Lloyds (LLOY.L) is planning three EU subsidiaries, Reuters reported in July.
Germany Presents a Different Credit Card Market
Germans are not known for their love of credit, in fact, while 91% of Germans own debit cards, only 52% own credit card. It will be interesting to watch as the business unfolds.
The restructuring of Barclays’ European operations illustrates the practical challenges Brexit creates for banks with customers and businesses on both sides of the English Channel. By consolidating its European branches under its Irish entity, Barclays is positioning itself to maintain access to EU markets even as the future relationship between Britain and the European Union remains uncertain.
The implications could be particularly interesting for Barclaycard as Barclays Brexit contingency plans bring its German credit card operations under the Irish entity. With German consumers showing a much stronger preference for debit cards than credit cards, Barclays will be navigating both regulatory change and a distinctive payments market as its post-Brexit European structure takes shape.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group