JOHANNESBURG – The announcement of Barclays’ sale of its South African subsidiary, Absa, is expected on Tuesday.
The Financial Times reports the the British bank has decided it should sell off its African operations and refocus on its core UK and US markets.
News that the bank was reconsidering its investments in Africa, including Absa, first surfaced in December last year.
After a review of the African business led by the new Barclays CEO, Jes Staley, the board decided last week that in principle it made strategic sense to get out of the continent, Financial Times said.
“Several people who have met Mr Staley recently say he recognises Africa is one of Barclays’ few genuine growth areas, but he believes it is becoming a costly distraction as the South African rand devalues and the country’s economy slows down.
“The bank also sees extra risks of corruption and misconduct in Africa,” the newspaper said.
The practicalities of how and when to sell Barclays Africa still have to be worked out.
The sale of the bank’s 62.3 percent stake in Johannesburg-listed subsidiary Absa will depend on market conditions, the response of regulators and other factors.
The stake is worth R78-billion at current market prices, but its value has fallen in recent months.
Investment bankers say there are no obvious buyers.
Barclays has operated in Africa for almost a century, but the recent contribution of the African business to the overall group’s profits has been hit by the devaluation of the rand, causing a return on equity of 9.3 percent last year, below the bank’s target of 11 percent.
