Barclays may be wondering if it was all worth it (Katherine Griffiths writes). The British bank has been in Africa for more than 100 years, despite facing protests at home in the 1980s for its supposed support of apartheid, but yesterday it announced its exit from the problem-hit but fast-growing continent within three years.
It was a “very difficult decision” to pull out of the 12 African countries where Barclays is present, according to Jes Staley, Barclays’ chief executive.
“When you are not generating retained earnings and have to meet growing capital ratios and your stock is trading below book value, your only fair alternative is to get out of businesses that are not strategically core,” he said.
There was no difference of opinion with John McFarlane, Barclays’ chairman, Mr Staley insisted, despite the tough-talking Scot saying last year that Barclays “would probably be biased to own more than less” in Africa for its long-term growth prospects.
Africa is too expensive to keep, Mr Staley believes. Despite owning only 62.3 per cent of the Johannesburg- listed Absa, global regulators count the division as completely owned by Barclays, so the UK bank levy and buffers such as the Basel standards for global systemically important banks are based on the whole African business. “We’re taking 100 per cent of the liabilities while taking only 62 per cent of the earnings. That makes it structurally invalid,” Mr Staley said.
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Barclays has left the door open to keeping a minority stake, if it can shrink it sufficiently so that regulators count its presence as a shareholding, not ownership of the whole entity.
There was speculation yesterday about who might buy the African business, which is valued at £3.5 billion and made £979 million of profit in 2015. An obvious, if ironic, choice is to sell to Atlas Mara, the London-listed African financial services business set up by Bob Diamond, Barclays’ former chief executive.