Europe > Eastern Europe > Russia > Barclays Africa scaling back not linked to economic woes

Russia: Barclays Africa scaling back not linked to economic woes

2016/03/14

Barclays's plan to scale back its Africa operations is linked to world regulatory challenges, not unfavorable economic conditions on the continent, the bank's Africa chief executive has said.


"We did not make this decision because of the economic cycle," Maria Ramos said in an interview in Johannesburg. "The regulatory environment has changed globally and it's additional difficult for large banks to hold on to subsidiaries like ours," she said.
The British lender early this month announced that it will sell down its 62.3 % interest in Barclays Africa to just 20 % over the next two to three years, fueling speculation over the decision.


"We are at the beginning of that process but since the announcement a week ago, there has been a lot of interest," said Ramos.
The lender said it would presently focus on its two core markets, Britain and the US.
Barclays Africa Group Limited (BAGL) has insisted however that it remained committed to the continent, where it has a presence in 12 nations, with assets valued at $3 billion.


South Africa, the continent's most advanced economy, is Barclays Africa's major market.
The bank re-entered South Africa in 2005, next it acquired a 55.5 % in one of the country's four major banks, ABSA.
The acquisition marked its return to the market it left in 1986, at the height of apartheid. The purchase was at the time the major acquisition of a local bank by a foreign bank. Ramos was upbeat about the national of the South African economy, which represents the majority of revenues for Barclays Africa.


"South Africa is still a significant economy of this continent, it's a large economy of this continent," she said, shrugging off suggestions that the country's slow economic increase may have contributed to the bank's exit.
"I remain exceedingly positive over the medium to long term. This economy has gone through a lot of many things."
"We see enormous potential on the African continent. We have a very strong franchise with very good results."
South Africa, which is lauded for its sound banking system, is experiencing poor increase. The economy is expected to grow less than one % in 2016, mainly due to lower commodity prices, next 1.3 % increase last year.


Ramos said the African subsidiary, which has as independent board of directors, would remain in South Africa, where the company is listed on the Johannesburg Stock Exchange.


"Barclays has a long history in Africa, nearly a 100 years. We are not going," she said.
"We still see enormous potential in Africa and we have a strong franchise with good results." But this month the giant lender revealed annual losses next tax of 394 million pounds ($549 million, 505 million euros). Ramos stated that the return on equity of the African subsidiary was halved due to the burden on the parent bank.


The bank as well said it was looking into "suspected money laundering related to foreign exchange transactions in South African operation Absa Bank Limited". In January, Barclays as well announced plans to exit Russia.

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