Barclays' new chief executive showed off his determination to put retail banking at the heart of his strategy with his first deal, adding 1.5 million customers by taking over the UK savings and loan business of Dutch bank ING.
ING said in August it wanted to quit Britain, part of plans to divest assets to increase capital and repay Dutch state aid. It will effectively pay Barclays to take its ING Direct business, including 750 employees, 10.9 billion pounds of deposits and 5.6 billion of mortgages.
Barclays will buy the loans at a 3 percent discount to their face value, leaving ING with a 320 million euro ($415 million)loss on the transaction after tax.
Antony Jenkins, who used to run Barclays' retail banking operations, took over as chief executive at the end of August after a Libor interest rate rigging scandal prompted previous CEO Bob Diamond, an investment banker, to resign.
Jenkins has signalled since taking the helm that he intends to focus more on retail banking, rather than riskier investment banking.
"To the extent that this deal signals CEO Antony Jenkins' revised strategic intentions and lower dependence on the investment bank, we view it as positive," said Vivek Raja, analyst at Oriel Securities.
In the last week Barclays has announced a shake up at its investment bank to cut costs and prepare for new regulations, and promoted two of the top consumer banking bosses.
Barclays said the acquisition was a good fit with its existing UK retail banking business, where it has about 15 million customers.
ING Direct was launched in Britain in 2003 and was one of the most aggressive new banks, using its distinctive orange lion brand and shaking up the UK savings market with high interest rates thanks to a low cost, mostly online operating model.
Barclays said the ING Direct deal meets the new CEO's target to deliver return on equity above its 11.5 percent cost of equity, and would not have a material impact on its capital.
The deal will release around 330 million euros of capital for ING, which is in the process of divesting its insurance operations and other assets in an effort to repay Dutch state aid received in 2008 and increase its capital level.
It sold its Canadian online bank in August, and is currently trying to sell its Asian investment management and insurance operations, a deal which could raise around $7 billion in total. It later plans to separately list its European and U.S. insurance and investment management businesses.
About 500 of ING Direct UK's staff are based in Reading, with the remaining 250 in Cardiff. Barclays said it was too early to say if there will be redundancies.
Completion is subject to regulatory approval and is expected to finalise in the second quarter of 2013.
Barclays shares were down 0.6 percent at 221 pence by 0736 GMT, in line with a weaker European banking index <.SX7P>.
(Additional reporting by Steve Slater and Gilbert Kreijger; Editing by Peter Graff)