News Ticker

Barclays Bank To Sell It’s Africa Business

Popular Stories

The news that Barclays intends to retreat from Africa after 100 years of doing business there was one of the most eye-catching lines from new Barclays CEO James Staley

Photo: Brendan Smialowski/AFP/ Getty Images
James E. Staley Barclays CEO

In recent years, former chief executive Antony Jenkins and before him Bob Diamond had described Africa as an important growth market for the bank.Barclays Africa employs 45,000 people in Africa, so it is not an easy thing to sell, and the list of potential buyers is not a long one.At the top of that list of potential buyers might be ex-Barclays chief executive Bob Diamond.Barclays said it would split the company into Barclays UK and Barclays Corporate and International by 2019.The UK’s big four banks are having to make these changes to comply with tougher new banking regulations designed to prevent ordinary customers suffering from decisions made by investment bankers in the event of another credit crisis.Barclays, like most of the world’s major banks, has been tainted by – and fined for – rigging prices in both foreign exchange and Libor interest rates.It confirmed it was assisting both the US Department of Justice and the Securities and Exchange Commission (SEC) in their investigation about Barclays’s hiring practices in Asia, which centre on allegations jobs were given to people with influence.In the UK, the bank said it had put aside a further £1.45bn this quarter to meet compensation claims for mis-selling payment protection insurance (PPI). That brings the total for this year to £2.77bn. Barclays has so far set aside £7.42bn for wrongly selling this insurance for loans.

https://i1.wp.com/ichef-1.bbci.co.uk/news/624/cpsprodpb/F6A6/production/_88024136_88024135.jpg?w=620
Photo: Reuters
Mr Staley told the BBC his main aim was to restore the bank’s reputation.
“We are working at Barclays to change conduct,” he said.
“I am truly dedicated that Barclays rests itself on the foundations of integrity and engenders trust from our clients, so the conduct issues will be a thing of the past.
“I do believe that trust is returning to our institution.
“But we will never rest, we are never done.
“We have to focus on building that trust every day.”
Mr Staley said the bank’s decision on Africa, where it has had a presence for more than 100 years, had been “very difficult”.
“The reality is, in this new regulatory environment, we carry 100% of the liabilities, but we only own 62% of Barclays Africa,” he said.
“It truncated possible returns from investing in Africa.”
Barclays has more than 12 million customers across 12 nations in Africa.
“You go to places like Uganda and Kenya and the brand of Barclays is as strong there as it is in the UK,” Mr Staley said.
“But we have to make some very difficult decisions if we are going to get Barclays into focused, clear, compelling business model that generates returns for our shareholders.”

https://i2.wp.com/ichef.bbci.co.uk/news/624/cpsprodpb/D409/production/_88518245_67qpkbzj.jpg?resize=620%2C348
Absa is part of the Barclays Africa Group
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the new boss was clearly taking a big broom to Barclays’s operations in an attempt to dramatically simplify the group.
“When the dust has cleared, the bank should have two high-quality financial services divisions, and the potential to offer investors a decent dividend, but it is going to take some elbow grease to get there,” he said.
Mr Khalaf said the move to reduce its interests in Africa made sense as it would “free up capital and get rid of an unwanted distraction as the bank continues its clean-up operations.”

 

Leave a Reply

%d bloggers like this: