World Economy

Barclays Will Exit Africa

Barclays Will Exit AfricaBarclays Will Exit Africa

British bank Barclays has confirmed it will be selling its stake in Barclays Africa.

The UK bank has a 62.3% share in the African operation. Speculation has been rife for some time that it had wanted to leave, African news agency eNCA reported.

Barclays on Tuesday said net losses more than doubled last year as it announced plans to gradually reduce its majority stake in the group’s African unit.

“We are today announcing our intention to sell down our 62.3% interest in our African business, BAGL, over the coming two to three years,” Barclays said in a statement and revealed annual losses after tax of £394 million ($549 million) for the bank as a whole.

The British bank said on Tuesday it planned to sell its 62% stake in Barclays Africa Group over the next two to three years. It would then concentrate on two divisions–Barclays UK and Barclays Corporate and International.

Chief Executive Jes Staley said Barclays was fundamentally on the right path. “There is of course more we need to do and areas where I believe we can move much faster to deliver the high performing Group that Barclays can and should be,” Reuters quoted Staley, who joined Barclays in December, said.

Barclays reported an adjusted pretax profit of £5.4 billion for the year ended Dec. 31, compared with £5.502 billion a year earlier and below the average forecast of £5.772 billion from a consensus of analysts’ forecasts.

In the few months since Staley’s appointment, Barclays has made sweeping cuts across its investment bank and exited several businesses including in Asia to trim costs, reduce risk and shore up its balance sheet.

The bank’s common equity tier one ratio, a key measure of financial strength, stood at 11.4% from 10.3% a year earlier, while its leverage ratio improved to 4.5%. However, legacy conduct issues continued to hurt.

 Anxiety in Kenya

The bank made an additional provision in the fourth quarter of £1.45 billion for mis-selling loan insurance, taking its total sum set aside for customer redress to £7.42 billion.

Meanwhile, anxiety has gripped the Kenyan financial markets as Barclays is set to announce the future of its African operations. The move is expected to affect its Kenya business.

The planned exit has sent shock waves in the local industry with bank CEOs saying the news would be earth-shaking as the Barclays brand in Africa has outlived generations.

“The value of its brand is so huge having cut identities across several generations. This is quite a shocker,” said the CEO of a local bank who did not want to be quoted discussing a rival lender.

Barclays Kenya is celebrating 100 years of existence. The lender’s parent company has also had well established operations in other parts of the continent for almost a century.

Barclays Africa Group Limited, which includes the South African branch network Absa, is one of the largest banks on the continent. Absa has 45,000 employees and 1,267 branches across 12 countries, including Kenya, Ghana, Tanzania, Mozambique and Uganda.