As a part of its strategy to partner with large brands to grow in the United States, the British bank Barclays will by purchasing a $3.8 billion credit card portfolio co-branded with clothing retailer The Gap Inc through the bank’s United States arm, the bank said on Friday.
According to the bank, it is purchasing the portfolio from Synchrony Bank, and it expects ot close off the deal by the second quarter of next year.
This move from the bank comes in the backdrop of banks all over the world attempting to expand their businesses that earns fee for them such as businesses in credit cards even as the central banks are choosing to hold interest rates at ultra-low levels that have eroded profits of the banks from the main business of lending of the banks.
In April this year, there was announcement of a deal between Barclays and Gap according to which the tow companies would be issuing co-branded credit cards to Gap customers in 2022.
In recent years, the British bank has struck partnerships with large brands including American Airlines, JetBlue and Wyndham Hotels.
This strategy of issuing co-branding financial products by Barclays is aimed to gain more customers in the United States market where its branding lags behind the reach of incumbent competitors such as JPMorgan and Citibank.
Over the last few years, one of the strategies adopted by Barclays is to shift from it trying to push credit cards with its own brand name to striking partnerships with more established names and brands in a range of industries from travel to leisure.
It is expected that the core capital ratio of the bank will get reduced by about 20 basis points after the completion of the Gap acquisition which is being financed from its existing resources, Barclays said.
(Adapted from MarketWatch.com)