Barclays, Britain's third-largest bank, is reportedly encountering difficulties in its efforts to sell a stake in its UK merchant payments arm.

According to sources cited by Reuters, the bank's plans to revamp the unit have been complicated by disagreements over its valuation and recent developments in the payments sector.

Multiple private equity firms, including Brookfield Asset Management, have reportedly withdrawn from bidding in recent months. The Canadian asset manager, which oversees more than $825 billion, is said to have pulled out primarily due to concerns over the price sought by Barclays.

The sale process has been further complicated by the recent takeover of Takepayments, one of Barclays' partners in the payments business. This acquisition could potentially lead to reduced revenues for the unit, sources suggest.

Barclays initially hoped to value the payments business at more than £2 billion. However, by the time sale documents were distributed to potential bidders, that valuation had reportedly slipped to just over £1 billion. Some offers fell short of Barclays' expectations, partly due to the business's declining market share and the investment required to restore growth.

Despite these challenges, Barclays remains open to selling a stake in the business, according to one source. The bank had previously announced it was exploring options for the payments arm in December 2023, when it wrote down its value by £300 million.

Barclays chief executive officer C.S. Venkatakrishnan acknowledged the complexity of the sale process in June, citing the intricate technology and financial arrangements involved. "As we confirmed at our February investor update, we are exploring a number of options for investment in our market-leading merchant acquiring business, including strategic partnerships," a Barclays spokesperson stated this week.

The difficulties come amid a broader sell-off in the European payments sector over the past three years, triggered by concerns over revenue outlooks at companies such as Worldline, Nexi, and Adyen.

The attempted sale of the payments business is part of a larger review of Barclays' global payment activities. In July, the bank sold its German consumer finance business to Austrian bank BAWAG, a move expected to release about 4 billion euros of risk-weighted assets and boost Barclays' CET1 ratio by approximately 10 basis points.

As Barclays continues to navigate these challenges, the bank remains committed to exploring various options for its payments arm. However, the path forward remains uncertain as the bank grapples with valuation disagreements and a shifting landscape in the payments industry.

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