Barclays mulls over potential sale of its Italian branches

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Barclays has held talks about the potential sale of Italian branches as part of its review of operations not delivering profitable returns, a source said on Wednesday.

The bank has 191 branches in Italy and preliminary talks on a sale have been held, but it is also still considering other options such as keeping them or restructuring, the person said.

Chief executive Bob Diamond has been pushing on with a plan to get rid of underperforming operations or areas that cannot deliver a return of equity of 13 per cent, saying no business was sacred and any can be sold.

There has been speculation for several years that Barclays could sell its Italian business, mostly located in the north, and the number of potential buyers is limited.

Barclays declined to comment.

This week, the bank sold its 19.6 per cent stake in US asset manager BlackRock for about $5.6bn, delivering a £200m ($316m) gain, as tougher regulations hit the return it could make on the stake.

The bank is also reported to be considering the sale of its retail bank, insurance and asset management businesses in France.

Its European retail and business banking made a pre-tax loss of £661m last year, after a £168m loss in 2010, hit by bad loans in Spain.

Rivals including HSBC are also selling businesses in an effort to boost returns in the face of more costly regulations.

n Spain has to plug a hole of at least eight billion euros ($10.21bn) at Bankia, part of an effort to clean up a banking sector laden with bad debts and stop the country sinking further into the eurozone debt crisis.

Economists say Spain has little hope of emerging from recession unless there is a wide-ranging bank recapitalisation and many predict it will need an international aid package similar to the ones handed out to Greece and Ireland.

Spain says it does not need outside money and government sources said it would outline a rescue for the country’s fourth largest lender, formed from the merger of seven banks during an earlier unsuccessful restructuring.

The government has just picked Goldman Sachs to value Bankia and consultancies Oliver Wyman and Roland Berger were hired to audit other banks’ loan books.