The decision by Barclays Group to exit the African market will have minimal or no impact at all on the local operation, Barclays Botswana Managing Director Managing Director Reinette van der Merwe made an assurance on Tuesday during the Barclays Africa Group financial results announcement. An official announcement was made on Tuesday that Barclays has taken a decision to exit the African business by selling its shareholding in the Johannesburg Stock Exchange (JSE) listed Barclays Africa Group Limited (BAGL)- a decision which is said to be purely based on regulatory issues rather than lack of profitability or poor performance from the subsidiary.
The explanation provided for exiting the business is that Barclays is 100 percent financially responsible for BAGL while enjoying only 62.3 percent of profits. The other reason is that the UK Bank Levy and other regulatory requirements present challenges to Barclays as owners. It is expected that the sell-down will result in the simplification of Barclays Group and result in cost reductions of 2 billion Pounds. The selling of shares will also lead to 40,000 headcount reduction. Barclays Group held 62.3 percent stake in BAGL which in turn holds about 67.8 percent shares in Barclays Bank Botswana.
But, according to Van der Merwe, business will remain as usual with no changes in management expected and the local operation will continue to exist as before as an independent entity. The selling of shares in Barclays Africa Group, which are valued at more than R70 billion, will take place over the next three years. The BAGL financial results which were also announced on Tuesday show the group’s revenue has grown by 6 percent to R67.2 billion, with Net interest income increased by 8 percent and non-interest income by 5 percent.
The group CEO, Mario Ramos, said these are solid results which demonstrate that the bank’s strategy is working. BAGL’s ambition is to be the leading bank in Africa and that position remains unchanged according to Ramos and Barclays Africa is now top three by revenue in four of the five markets largest markets: that is South Africa, Botswana, Ghana and Zambia. The bank’s return on equity is reported to have improved by 17 percent which is considered the highest level since 2008.