Barclays mum amid fresh Africa sell-off speculation

Barclays Bank has remained mum over fresh speculation that its London-based parent company is looking to significantly downsize its Africa operations due to sluggish profitability.

The Wall Street Journal (WSJ) Tuesday reported that Barclays Plc is preparing to sell part of its 62 per cent stake in Barclays Africa Group, the publicly traded entity that houses its continent-wide business.

This comes barely a month after the Financial Times reported that the global lender, whose business in Africa is valued at about Sh500 billion, is considering selling some or all its subsidiaries in the continent.

Both the Nairobi Securities Exchange (NSE)-listed Barclays Kenya, which is 42.6 per cent owned by the British multinational, and the South African continental headquarters, declined to comment on the proposed divestiture.

“We do not comment on speculation,” a Barclays Africa spokesperson told the Business Daily in an email response following publication of the WSJ article on Tuesday.

Barclays Plc’s new chief executive Jes Staley is reportedly keen on divesting from some or all Africa subsidiaries and refocusing the lender’s business on “a narrower range of profitable activities.”

The plan to sell the African banking units is reportedly linked to recent weak performance, partly fuelled by the weakening of local currencies including the South African Rand.

READ: Barclays’ parent company could sell Kenyan unit

Barclays’ African businesses recorded a return on equity (ROE) of 9.3 per cent in 2014, below its target of 11 per cent, while its pre-tax profit stood at Sh151.3 billion, with nearly 80 per cent of that coming from South Africa.

Barclays Bank of Kenya’s net profit for the nine months to September increased 2.56 per cent to Sh6.4 billion compared to Sh6.24 billion reported during a similar period the previous year.

In December, London-based Financial Times reported that Mr Staley is examining Barclays’ overall strategy and is expected to present his plans to investors around the time of releasing the bank’s annual results on March 1.

He is also expected to announce several thousand job cuts in the lender’s investment banking unit, particularly in Asia, according to the newspaper.

The latest divestiture reports come days after Barclays Africa announced that it would be closing its regional management office based in Nairobi and shift all support role to South Africa.