Johannesburg - Barclays Africa dropped the most in seven weeks on speculation the lender’s London-based parent plans to sell its 62.3 percent stake as part of a plan to exit operations on the continent.
Shares in Johannesburg-based Barclays Africa slid as much as 6.8 percent to R135.02, the biggest decline since January 11. The securities were trading 4.7 percent down at R137.96 as of 9.41am in the city. The company led losses on the seven-member FTSE/JSE Africa Banks Index, which dropped 2.4 percent.
Barclays plans to exit its African business as part of an overhaul of the firm led by Chief Executive Officer Jes Staley, a person with knowledge of the discussions said last week. Staley will probably announce the decision on Tuesday as he presents the company-wide review after the board agreed in principle that the business was no longer a strategic fit, said the person, who asked not to be identified because the discussions are still private.
The board of Barclays “continues to evaluate its strategic options” regarding its interest in Barclays Africa, the lender said in a statement on Sunday. The African unit said separately on Monday that it’s well capitalised and has a track record of strong returns. While Barclays Africa, formerly known as Absa Group, has historically been more profitable than the bank’s other three main divisions, it’s been hurt by the falling South African rand, which has weakened 27 percent over the past 12 months.
Seeking growth
The UK bank, which has had operations in some African countries for more than a century, first bought a controlling stake in the South African lender in 2005. It was searching for growth outside of the UK where lending was slowing and wanted to consolidate its businesses across Africa. It was the biggest acquisition by Barclays outside of the UK at the time.
“With an independent board and a separate listing on the Johannesburg Stock Exchange we are deeply rooted in Africa and remain firmly in control of our future,” Maria Ramos, chief executive officer of Barclays Africa, said in the statement.
With over R1 trillion ($62 billion) in assets and more than 12 million customers in 12 African countries, any announcement about the British bank’s shareholding won’t impact the ownership of the operations across the continent, Ramos said.
BLOOMBERG