Barclays to try dump bad-debt clients

BANKING giant Barclays is preparing to sell part of its Barclaycard credit card business in a bid to cut its exposure to bad debts, it was reported today.

The company has begun moves over a £1 billion (€1.48bn) sale of its Monument credit card business and retail finance arm Clydesdale Financial Services, the Mail on Sunday newspaper said.

The move comes as the bank’s results for 2006 on Tuesday are expected to show pre-tax profits soar by nearly a third to more than €10.4bn.

But the gains have been driven by the company’s investment banking business and concerns remain over bad debts from unsecured lending within Barclaycard and its UK retail bank operation.

Monument, which Barclays bought in 2002 from US finance group Providian, lends money to customers with poor credit histories and has more than 500,000 customers in the UK.

Barclays is said to have drawn up a list of potential buyers for the operation — expected to fetch €1.1bn – including US financing firms MBNA and Financial One, and UK lender Provident Financial.

Clydesdale, which provides store cards to High Street names including clothing chain Next and photography chain Jessops, is said to have attracted interest from private equity firms and European banks keen to enter the UK retail finance market. The business could fetch more than £200 million (€297m).

A Barclays spokesman was unavailable to comment on the reports of the sale, which comes at a time of increasing worries among lenders over bad debts.

Barclay’s results last year included a 19% drop in profitability at Barclaycard after a greater hit on bad debt levels.

Rival HSBC also warned that its bad debt provisions for 2006 would be 20%, or €1.3bn higher than expected in the City, following the impact of a slowing housing market on the company’s sub-prime mortgages business in the United States.