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Barclays to surrender control of Africa unit with R26bn sale - report

May 31 2017 16:30
Fin24 with Bloomberg and Sky News

Cape Town - The Finance Minister has approved a deal to sell Barclays' Africa division, which includes Absa, according to the group's investment note issued on Wednesday afternoon. 

This follows a report by Sky News that the group plans to sell a R26bn stake in its Africa division. The proceeds will likely be redeployed elsewhere in the group, Sky News reported. 

The Public Investment Corporation (PIC), Africa’s largest money manager, has already shown interest in boosting its holding in Barclays Africa Group [JSE:BGA]. It holds a 6.4% stake in BAGL.

Dan Matjila, chief executive officer of the PIC, told Bloomberg in December that there is appetite from PIC side to increase their stake.

The PIC is yet to respond to Fin24's request for comment. 

Last year, Barclays announced its intentions to reduce its shareholding in Barclays Africa Group over a two to three year period. In February 2017 the group submitted its request to reduce its holding below 50% to the relevant regulators for approval. 

“Barclays and BAGL (Barclays Africa Group Limited) have now received the required regulatory approval from the minister of finance in South Africa for the sell-down," the group confirmed in an announcement to shareholders. 

Sky News, citing insiders, reported that Barclays is drawing up plans to reduce its shareholding in Barclays Africa Group from 50.1% to approximately 28%.

The London-based lender sold more than 12% in its African unit to investors including the PIC in May through an accelerated book build, Bloomberg reported last year.

Barclays CEO Jes Staley, who took over in 2015, decided in March last year to sell down the stake in its African operations because the bank's 62% ownership meant it had to fully allocate capital to the business, but got less than two-thirds of its profits.

The bank sold a 12.2% stake on May 4, 2016 leaving it with 50.01%. It needs to reduce the holding below about 20% for it to be deconsolidated from its accounts

Barclays Africa said in a separate note to shareholders on Wednesday BAGL’s overall risk weighted assets increased by R1.2bn from December 2016 to March 2017 mainly due to an increase in credit risk as a result of exchange rate movements for entities outside South Africa as well as loan growth in Corporate and Investment Banking.

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