(Bloomberg) -- Barclays Plc agreed to sell its German consumer finance business to Bawag Group AG as part of the British banking giant’s efforts to streamline its footprint across business lines and geographies.

The Hamburg-based division, formerly known as Barclaycard Germany, will change hands for a small premium to net assets, payable in cash on completion, Barclays said in a statement on Thursday. It didn’t give a value for the transaction. A year ago, Bloomberg News reported that Barclays might be seeking about €500 million for the unit.

The sale aligns with Barclays’ ambition to simplify itself and “we remain committed to our broader German and European operations and look forward to continued growth in the region during 2024 and beyond,” Francesco Ceccato, chief executive officer for Barclays Europe, said in the statement.

The German business had gross assets of €4.7 billion ($5.1 billion) as of March 31, primarily comprising card and loan receivables, Barclays said. The bank kicked off the sale process early last year as it stepped up a review of its operations, with group CEO C.S. Venkatakrishnan coming under pressure to boost returns that have trailed rivals. 

The deal, subject to approvals and due to conclude in six to nine months, is expected to release €4 billion in risk-weighted assets and boost Barclays’ CET1 ratio by about 10 basis points on completion, Barclays said.

Barclays shares rose as much 1.6% in early London trading on Thursday.

Bloomberg News reported in December that Vienna-based financial group Bawag had emerged as a frontrunner to snap up Barclays’ German consumer finance business. In a similar move, French financial titan Societe Generale SA has also been exploring the sale of its German consumer finance business, Hanseatic Bank.

Bawag said separately that the transaction is expected to contribute a pretax profit of more than €100 million in 2027 after full integration. Its shares rose as much as 1.3%.

The purchase may be one of Bawag’s largest since a restructuring in the run-up to the global financial crisis led by private equity firm Cerberus Capital Management. It bought Dutch online lender Knab from ASR Nederland NV earlier this year for €510 million, and Germany’s Depfa Bank in 2021. It has also conducted bolt-on transactions in Austria and the US in recent years.

Speaking to Bloomberg News, Bawag CEO Anas Abuzaakouk said Thursday that his company isn’t currently looking at other transactions. “Our plate is full,” he said in an interview.

“We were both rewarded as it fit Barclays’ strategic plans and more importantly it gives us a growth platform,” Abuzaakouk said.

Bawag has come under criticism by activist investor Petrus Advisers for its business model, including what Petrus described as a reliance on credit portfolio acquisitions to balance out a lack of organic lending growth. Bawag has rejected Petrus’ criticism.

(Updates with Bawag CEO comment in 10th and 11th paragraphs.)

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