Barclays to Buy British Retail Unit from ING

LONDON â€" Barclays agreed on Tuesday to buy the British savings and loan business of the Dutch firm ING Group.

The deal reflects Barclays shifting focus towards retail banking following the recent rate-rigging scandal led to the resignation of Barclays' former chief executive, Robert E. Diamond Jr. The firm's new chief, Antony Jenkins, previously ran Barclays' retail banking operations, and has said he will stop business activities that pose a “reputational risk” to the British bank.

Last week, Barclays announced a broad reorganization of its investment banking unit, the group at the center of the rate-rigging case. Hugh E. McGee III, one of the firm's top deal makers, became its most senior corporate and investment banker in the Americas, while Eric Bommensath will run a combined fixed-income and equities sales and trading division.

Under the terms of the deal announced on Tuesday, the British bank will acquire deposits of £10.9 billion ($17.5 billion) and mortgages worth a combined £5.6 billion from ING Direct U.K. The acquisition also will add 1.5 million customers to Barclays' existing 15 million client base, according to a company statement.

The British bank will acquire ING Direct U.K.'s mortgage book at a three percent discount, while the deposits will be acquired at par value, the firms said in separate statements.

“The acquisition of ING Direct U.K. is a good fit with Barclays' existing U.K. retail banking business,” Ashok Vaswani, head of Barclays' British retail and business banking unit, said in a statement.

The deal, which is expected to close in the second quarter of next year, will result in a 260 million euro ($336 million) net loss for ING. The Dutch bank added the loss would be offset by 330 million euros of extra capital that would be freed up when the deal is completed.

The Dutch firm has been forced to dispose of assets around the world as part of a bailout fr om its local government during the financial crisis. Last month, ING sold its 9 percent stake in Capital One though a public offering worth around $3 billion.