The Financial Times (FT) are reporting that Barclays is considering selling some or all of its African banking operations as part of a review led by new chief executive Jes Staley, its new chief executive.
Although no decision has yet been taken, Mr Staley has raised questions about the strategic fit of the UK-based bank’s large African business with the rest of the group. When asked by the FT, Barclays declined to comment.
Barclays has had operations in parts of Africa for almost a century, but the recent devaluation of the South African rand against the British pound have hit the African businesses contribution to the overall group’s profits.
The African unit’s return on equity was 9.3 per cent last year — below the bank’s target of 11 per cent.
However, according to ‘people familiar with the matter’, Mr Staley is unlikely to pull out of the continent although Barclays could decide to sell its retail banking operations in much of Africa, including Kenya, along with South Africa, Mauritius, Botswana and Zambia, while keeping some corporate and investment banking activities in the region.
Barclays UK bank owns 62 per cent of Barclays Africa Group Limited and investment bankers believe that if Barclays did decide to exit the African market, it could sell BAGL shares into the market or trigger domestic consolidation by selling the stake to a local rival, such as Standard Bank, Nedbank or FirstRand.
Another option is to spin off the Africa business by giving shares in BAGL to existing Barclays shareholders with Atlas Mara, the acquisition vehicle set up by former Barclays chief executive Bob Diamond to buy African lenders, possibly interested in buying.
However, worth around £3.3bn, this could be beyond the reach of Atlas Mara which currently has a market value below £400m.
Economic outlook for Africa has deteriorated this year as oil and commodity prices have fallen sharply and China’s economy has slowed.
The International Monetary Fund has forecasted sub-Saharan Africa growth at a mere 3.75 per cent this year, its lowest since 2009.
Staley, a former JPMorgan Chase executive,is planning to visit Africa in his first trip outside the UK and US and is expected to present his plans to investors around the time of its annual results on March 1.