Brazil Next To Go As Barclays' World Shrinks

Barclays (LSE: BARC.L - news) is to open talks with potential buyers of its Brazilian business as part of a wider restructuring led by the new chairman of Britain's second-largest bank.

Sky News has learnt that Barclays executives have sanctioned a process to explore an exit from parts of its remaining investment banking operations in the stuttering Latin American economy.

Discussions with prospective acquirers of Barclays' assets are at a preliminary stage, sources said on Sunday.

They underline the determination of John McFarlane, who became the bank's executive chairman during the summer following the ousting of Antony Jenkins as its chief executive, to accelerate the dismantling of its non-core division.

Barclays has in recent weeks struck a deal to offload retail banking operations in Portugal, and is exploring a similar exit in Italy.

Those moves have hastened the UK-based lender's retrenchment from Eurozone economies at a time when the Greek debt crisis had raised fresh investor concerns about the exposure of British lenders.

Barclays does continue to own a significant business in France, but the shrinking of its international footprint reflects Mr McFarlane's remark that the bank needed to be "much more focused on what is attractive, what we are good at, and where we are good at it."

The decision to offload parts of its Brazilian business comes just weeks after HSBC secured a better-than-expected price for its operations in the country, although the profile of the two banks' activities there is markedly different.

Insiders said that Barclays had already reduced its investment bank's presence in Brazil approximately two years ago, with research analysts' coverage of Brazilian coverage now led by teams in London, Mexico City and New York.

It (Other OTC: ITGL - news) continues to offer services such as fixed-income advisory and risk solutions on the ground in Brazil, and is expected to maintain a limited presence in the country even after the forthcoming asset sales.

Barclays established a non-core unit last year, into which it placed a broad range of loans and businesses accounting for more than £100bn of risk-weighted assets.

It has since sold a number of them, including its retail operations in Spain, which were acquired by CaixaBank (Other OTC: CAIXY - news) , the country’s third-biggest lender, last year.

Mr Jenkins' departure surprised the City after Mr McFarlane had signalled that there would no change in Barclays' strategy.

Sources acknowledged that there had been tensions between Mr Jenkins and Tom King, who runs Barclays’ investment bank, over the poor returns generated by the division in recent years.

The search for Mr Jenkins' successor is well underway, with an appointment said to be likely before the end of the year?

Mr McFarlane said during the summer that it was important to make “the right decision, not a quick one”.

In relation to the future of its Brazilian business, a Barclays spokesman told Sky News on Sunday:

"We are constantly monitoring our opportunities in different geographies and businesses over the cycle.

"If any firm decisions are made, we will provide an update."