Tue Aug 21, 2012 1:55pm GMT
LONDON/JOHANNESBURG (Reuters) -
British bank Barclays is in talks about combining its African operations
with those of majority-owned subsidiary Absa Group in a move aimed at
accelerating expansion on the continent to catch up with rivals.
Barclays acquired a majority stake in South Africa's
third-largest bank in 2005 but the two have remained separate entities
outside South Africa - in one case, Tanzania, running parallel
operations in the same country.
The bank said on Tuesday that combining the businesses would help increase growth opportunities in Africa.
"The Africa business is an important long-term growth driver,"
said Oriel Securities analyst Mike Trippitt who estimates Barclays'
African loan book will grow by an average 9 percent per annum between
2011 and 2015 compared with 5 percent for the group.
Analysts have said Absa, which is 56 percent owned by Barclays,
has been slow to take advantage of its parent's wide presence on the
continent, trailing fast-moving rival Standard Bank.
Absa's shares have been hammered on concerns that rising bad
debts were derailing its recovery. The bank posted a surprise drop in
first-half earnings last month.
The shares are down nearly 7 percent over the last six months,
making it the worst-performing stock among South Africa's four biggest
banks. By contrast, rival FirstRand is up nearly 20 percent over the
Absa shelved plans to buy Barclays' African assets in 2008 citing
price differences. The planned purchase had been part of the original
deal when Barclays acquired its Absa stake.
The latest proposal would see Barclays combining its interests in
Botswana, Ghana, Kenya, Tanzania, Uganda, Zambia and the Indian Ocean
with Absa, and remaining as the majority shareholder of the combined
Barclays and Absa had already agreed to work more closely together in
their "One Africa" strategy and had set up a joint team of executives.
The proposed combination of the businesses will mirror the
operational structure already in place, said Maria Ramos, chief
executive of Absa and Barclays Africa.
"It will provide a platform for further growth," she said.
The two lenders are hoping to grow their retail and corporate
franchise across the continent, while growing the investment bank. They
have launched financial services in Botswana, Mozambique and Zambia, and
are planning to roll out similar products in Kenya.
"It will result in cost savings," said Faizal Moolla, an analyst
at Avior Research. "It could mean that Absa will be focused on South
Africa and the new combined entity will spearhead the drive into
Barclays said combining the businesses would not result in job cuts.
Shares in Barclays were up 1.8 percent to 194.3 pence at 1323
GMT, compared with a 0.7 percent rise in Europe's bank index. Absa was
down 0.1 percent compared with a 1 percent increase in the Top-40 index.
(SOURCE- Thomson Reuters, 2012)