Cape Town – Banking group Absa, listed as Barclays Africa Group [JSE:BGA], on Thursday declined to comment on “speculation” that Barclays intended to shed its R73bn controlling stake in its South African subsidiary.
Financial Times reported that the UK lender was considering the sale of some or all of its operations in Africa, without citing any sources.
The bank’s new chief executive Jes Staley has raised questions about the strategic fit of the lender’s large African business with the rest of the group, FT reported.
Barclays shares changed hands at R140.53 (-0.71%) by 15:10 on the JSE, underperforming peers FirstRand [JSE:FSR] (+4.76% at R44), Standard Bank [JSE:SBK] (+5.49% at R114.79), Nedbank [JSE:NED] (+2.57% at R186.67) and Capitec [JSE:CPI] (2.41% at R548.00).
The report follows a turbulent two weeks in the history of the South African economy after President Jacob Zuma fired the respected finance minister Nhlanhla Nene and replaced him with the relatively unknown ANC MP David van Rooyen.
Nene’s removal wiped about 19% off the value of the banking index in the two days following Nene's axing, according to a Bloomberg report.
The rand hit a record low of 16.00 to the dollar before its recent recovery to around R14.93 against the greenback after Zuma did a U-turn to reappoint the more experienced Pravin Gordhan.
Absa spokesperson Byron Kennedy told Fin24 that the Financial Times was speculating and that “we do not comment on market speculation”.
According to BizNews Barclays’ 62% controlling stake in Absa worth R73bn, has been slashed by R6bn after Zuma’s flip-flopping.
On December 13 ratings agency Fitch downgraded Absa and Barclays Africa Group's [JSE:BGA] long-term foreign and local currency IDRs to 'BBB' and 'BBB+', respectively from 'A-', as a result of South Africa's Country Ceiling being revised to 'BBB'.
Economist Mike Schussler told Fin24 that it was a bad time for banks with the country battling drought, low commodity prices, credit rating downgrades and market uncertainty.
Barclays has been hit with rising costs linked to its restructuring activities and past misconduct within the company, according to Bloomberg report, which said that Staley had pledged to restore profit growth to the group.