The High Court has sanctioned a scheme transferring Barclays Bank Ireland plc’s Hamburg consumer banking business to Barclays Administration Germany Limited (BAGL), clearing the first legal step in its planned sale to Austrian bank BAWAG.
Mr Justice Michael Quinn delivered the judgment on 20 December 2024. He made orders under sections 453 and 455 of the Companies Act 2014, sanctioning the scheme and providing for the transfer of the business’s assets, liabilities and agreements to BAGL. The orders do not themselves complete the sale to BAWAG.
Under the transaction agreed on 4 July 2024, the transfer to BAGL is intended to take effect at 23:59 CET on the scheme’s effective date. One minute later, BAGL is due to merge into BAWAG. That merger still required European Central Bank approval at the time of the hearing. The scheme would terminate if the merger were not registered by 4 January 2026, unless the parties agreed a later date.
The Hamburg branch had 2.3 million customers, €4.6 billion in deposits, €4.3 billion in net loans and advances, and 650 full-time employees. Barclays told the court that transferring contracts and liabilities through the scheme would avoid the practical difficulty of obtaining consent from millions of customers and other counterparties. The court heard that the transaction was intended to reduce disruption.
The scheme was approved at a meeting of Barclays Bank Ireland’s sole member, Barclays Bank plc, on 27 September 2024. The court found that creditors’ claims were not being reduced or impaired and that proceeding as a members’ scheme was appropriate. Notices were sent to customers, suppliers, counterparties and employees. No third party appeared at the sanction hearing or objected to the scheme. Seven employees had objected to transferring to BAWAG; the court noted that employees who maintained their objections would be redeployed by Barclays Bank Ireland.
The court also considered whether it had jurisdiction despite most affected customers and creditors being outside Ireland, and whether the scheme would be recognised in Germany, Austria, the Netherlands and Luxembourg. It concluded that it had jurisdiction and that the scheme and transfer orders would be recognised in those countries, based on legal opinions presented to it.
A central issue was whether the scheme qualified as a reconstruction, a condition for making the transfer orders. Although BAGL is intended to merge into BAWAG one minute after receiving the business, the judge held that the scheme was a reconstruction of Barclays Bank Ireland. He also noted that the bank would retain 97% of its business under the same ownership.
The judgment does not decide the transaction’s tax treatment. The separate pre-merger certificate process had also been deferred pending the final stage of the ECB merger approval process.