Barclays seals $2.1 billion Africa deal with Absa
By Helen Nyambura-Mwaura | December 7, 2012 12:07 AM EST
South Africa's biggest retail bank Absa , majority-owned by Barclays Plc
Absa had been prevented from expanding into Africa as its parent was already operating in the region, effectively ceding some lucrative markets to bigger rivals such as Standard Bank
Absa will be renamed Barclays Africa Group Ltd but will retain the Absa brand for its retail and card business in South Africa once the transaction is completed in the first half of next year, the banks said in a joint statement.
Barclays plans in the region were revealed in August as a "One Africa" strategy and a platform for further growth.
Some of Barclays' operations that will be folded into Absa as part of the deal have been running for close to a century and cover Botswana, Ghana, Kenya, Mauritius, Seychelles, Tanzania, Uganda and Zambia.
Barclays first mooted the idea of selling its African assets to Absa when it acquired the lender in 2005, but the pair couldn't agree on price.
"The big benefit is they get a business that is up and running," Afrifocus Securities analyst Johann Scholtz said. "It places Absa on equal footing with the likes of Standard Bank."
The Egyptian and Zimbabwean businesses were left out of the 18.3 billion rand transaction and Barclays units in Kenya
"Initial impressions are that the price they (Absa) are paying for it is not overly demanding. It's about 1.7 times book, which is pretty much in line with where Absa itself is currently trading," Scholtz said.
Absa CEO Maria Ramos said the transaction was unlikely to lead to job cuts though there will be board changes at Absa.
"We've already done over the last year and a half a lot of work on pulling our operations together. We are not doing this to cut jobs," she told journalists on a telephone conference.
South Africa's "Big Four" lenders have been extending their reach north hoping to hedge against competition back home and dwindling fortunes in developed markets.
Standard Bank has scaled back from Latin America and Europe to concentrate on its 17 African businesses, while FirstRand is trying to expand its reach past the seven countries it already operates in and into Ghana and Nigeria.
Absa shares gained 4.6 percent to 148.27 rand at 1009 GMT, while those of Barclays were up 1.7 percent.
Absa shares have lagged those of rivals, growing only 5 percent year to date, compared with nearly 50 percent for FirstRand and 25 percent by Nedbank.
($1 = 8.7866 South African rand)
(Additional reporting by Olivia Kumwenda; Editing by Ed Cropley and Elaine Hardcastle)
Most Popular Slideshows
- Manny Pacquiao Vs. Chris Algieri World Tour Kick Off Press Conference In Macau [PHOTOS]
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- Top 5 Richest Tennis Athletes
- 2014 US Open Update (Day 4 - Men's Singles): Murray, Djokovic, Raonic and Isner Advance to 3rd Round [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Sept 19 iPhone 6 Release Date Confirmed as Apple Sets Sept 9 iWatch, 2 iPhones Intro - Report
- Nexus 6 Release Date Will Intro Android 5.0 aka Lemon Meringue Pie with Killer Specs & Features
- Hundreds of Men Rape Teen for Three Years
- iPhone 6 Release Date Update: 4.7-Inch Model Scores 65.8% In Screen-To-Size Ratio; A Surprise Entry Scales Top Spot [List Attached]
- Product Recall Alert: Hewlett-Packard Pulls Out 6M Power Cords from US, Canada Over Fire Hazard Concerns, Australia Also Affected
- ISIS Wants $6.6M and Release of Aafia Siddiqui in Exchange of Head of Female US Humanitarian Aid Worker, 1st American Fighting for Jihadis Dead
- Ukraine Ceasefire Looks Remote As Putin Talks Tough At Meeting With Poroshenko