Barclays Is Pulling Out Of Africa
UK-based international bank Barclays has said it plans to pull out of Africa by reducing its majority stake in Absa, The Wall Street Journal reported.
The bank which owns 62 percent of Barclays Africa, while Absa owns the rest, said its executives had reached a decision to sell some of its shares in the group that operates in several African countries including South Africa, Kenya and Botswana.
Barclays Africa is one of the continent’s largest banks, employing over 44,000 people in its 1,267 branches. The African unit contributed $1.13 billion to the group’s pre-tax profit in the first nine months of last year, 15 percent of the bank’s total.
The move is seen as a decision of Barclays new CEO Jes Staley to concentrate on high performing units of the bank.
Previous CEO’s of the bank were aggressive with their African expansion strategy. It bought a majority stake in South African bank Absa in 2005 as it built a steady stream of acquisitions.
Bob Diamond, Barclays former chief executive, resigned in 2012 and two year later moved to create the largest bank in sub-Saharan Africa through Atlas Mara, an investment vehicle he formed with Ugandan-born Dubai-based entrepreneur Ashish Thakkar.
Diamond’s Atlas Mara has already bought into banks in Botswana, Mozambique, Tanzania, Zambia, Zimbabwe and Rwanda, and said it is eying more commercial banks in Africa in its bid to become the continent’s leading bank.
Sub-Saharan Africa’s banking sector is expected to face some serious head wind as many economies in the region get hit by weakening currencies as falling commodity prices hurts foreign exchange revenue for many countries.
Last week, global rating agency Fitch warned in a report that the banking sector for the whole of sub-Saharan Africa has a bad year ahead.
Fitch said banks are “likely to face slower growth, weaker earnings, worsening asset quality and tighter liquidity and capitalization.”