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The Deal: Barclays, BofA Pull Back from Mideast and China

NEW YORK ( TheStreet) -- Barclays (BCS) and Bank of America (BAC - Get Report) will prune more of their businesses as scrutiny on returns intensifies against a tough new regulatory backdrop.

Barclays will sell its retail bank in the United Arab Emirates after exiting its consumer businesses in Russia, India, Pakistan and Indonesia over the past three years. Its UAE portfolios in credit cards, mortgages and personal lending are not expected to fetch more than a few hundred million dollars each with sale finalization slated for the end of 2014.

Meanwhile, Bank of America will sell its 1% stake in China Construction Bank -- the Asian nation's second-largest lender -- for around $750 million. Bank of America CEO Brian Moynihan said a partnership that was recently extended to 2016 would remain between the institutions.

"We have built a strategic partnership based on shared operational expertise, and our clients in China and Asia recognize Bank of America's ongoing association with one of the world's leading financial institutions," he said.

Bank of America paid $3 billion for a 10% stake in the lender in 2005 but sold the bulk of this interest in 2011 to boost its capital position. BofA follows in the footsteps of Goldman Sachs (GS), which sold its remaining stake in China's largest lender, Industrial & Commercial Bank of China, for around $1.1 billion in May. Both UBS (UBS) and Royal Bank of Scotland (RBS) have also sold stakes in Chinese banks as new regulations make it more punitive to hold minority stakes in other financial institutions from a capital perspective.

Barclays is selling its holding in the UAE retail arm as the combination of new capital requirements under Basel III and stiff competition from large local incumbents make it difficult for foreign banks to eke out sufficient return.

"Following a strategic review, Barclays has decided to refocus its efforts in the UAE on its key strengths in Corporate and Investment Banking and Wealth & Investment Management," the bank said Tuesday, reaffirming its commitment to the region where it will retain two branches.

The move is part of a review of Barclays' global business under chief executive Antony Jenkins where return on equity has been scrutinized across its various businesses. Other major banks to shed their consumer portfolios include Citigroup Inc., which has been selling its credit card businesses around the world and sold the remaining 35% stake in its wealth management business for $4.7 billion to Morgan Stanley in June.
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