Cape Town – Cutting its controlling shares in Barclays Africa [JSE:BGA] “was a very difficult decision to make”, Barclays Group CEO Jes Staley said on Tuesday.
Barclays Group announced on Tuesday its intention to sell down its 62.3% interest in Barclays Africa within the next two to three years.
“Barclays has been in Africa for over 100 years, and has excellent franchises and an excellent management team and colleagues,” said Staley.
Presenting his financial results in London, Staley announced that Barclays was radically simplifying its bank to focus on its core business in the UK and the US.
“We will further simplify our business to have a non-controlling, non-consolidating interest in Barclays Africa,” he said.
Staley said pulling out of Africa was in the best interest of shareholders, but said there will be flexibility in how the disinvestment will be implemented.
The process will take two to three years to ensure regulatory issues are resolved and for Barclays Group to engage with Barclays Africa shareholders to ensure there is a satisfactory outcome.
READ: Barclays Africa soothes stakeholders, warns of tough 2016
The Barclays Africa board said in a statement that the exit was due to “recently introduced regulatory burdens specific and particular to Barclays PLC as a UK headquartered and globally significant financial institution”.
“We will now actively engage with Barclays (Group) and our regulators to ensure that this process has an appropriate and satisfactory outcome for all our stakeholders,” it said.
Staley said he was liberating Barclays from businesses and investments that were legacy related but that had no strategic value or showed no prospect of future profits.
“We are going to address these matters head on,” he said. “We will put these issues behind us in 2016… by simplifying our core business.”
Barclays Africa reported a 10% increase in profit for 2015 on Tuesday, hours before the UK holding company announced it would exit the business.
The business that includes Absa announced that headline earnings increased 10% to R14 287m from R13 032m in its financial results ended 31 December 2015. Diluted headline earnings per share also grew 10% to R16.86 from R15.38.
It said the rest of Africa headline earnings grew 17% to R2.3bn and South Africa rose 8% to R12bn. About 80% of the bank’s profits come from South Africa.
“We continue to be optimistic about our prospects in Africa, where we have a strong franchise with assets of over R1trn,” said Barclays Africa CEO Maria Ramos. “We are deeply committed to the success of our continent. Our destiny is in Africa.”
Barclays Africa's share price increase by 3% to R140 by 11:40. The news also had a good effect on the rand, pushing the local unit to trade at R15.71/$.
The repercussions of the decision have already started, with an
announcement that Barclays Africa chairperson Wendy Lucas-Bull will step
down from the Barclays Group and Barclays Bank board with immediate
This is to “ensure that no conflicts of interest exist
as a result of her being a member of these boards,” Barclays Africa said
in a statement on Tuesday.
Her status will be that of independent non-executive chairperson on the boards of Barclays Africa and Absa Bank.