One of the biggest investors in SA, Barclays Bank plc, is suddenly keen to sell its 62% controlling interest in Absa. Suddenly you say? Well, there’s no proof that the option to sell was influenced by Zuma’s little confusion over who should be South Africa’s Minister of Finance. But, we all know it definitely had everything to do with it.

To make matters worse, after the whole of South Africa condemned the president for his actions, the ANC actually praised Zuma’s decision. This didn’t help the economy at all. And, although Barclays is also looking to its other major assets in Africa, literate economists – and commenters – won’t be surprised if other foreign investors pull out:

While some assume that it may be the EFF Julius Malema’s threat to occupy Absa banks next year, one thing’s for sure, South African’s are going to need some solid guidance on where and what to invest. Consequence has got your back and, while keeping a watchful and critical eye on the economy, will carefully advise you on financial investments and management.

Barclay’s stake is worth R73-billion (down by R6-billion since Zuma’s antics) and if they decide to sell, Barclay’s will break a 100 years of history in Africa. The decision was made as part of a review led by Jes Staley, the UK-based bank’s new chief executive, who raised questions about the strategic fit of  their place in Africa:

 

Mr Staley took charge of Barclays at the start of December. The former JPMorgan Chase executive is examining the bank’s overall strategy and is expected to present his plans to investors around the time of its annual results on March 1. He is also expected to announce several thousand job cuts in its investment bank, particularly in Asia.

Barclays has had operations in parts of Africa for almost a century. But the recent contribution of the African business to the overall group’s profits has been hit by the devaluation of the South African rand against the British pound. The African unit’s return on equity was 9.3 per cent last year – below the bank’s target of 11 per cent.

But good news is that Staley is unlikely to completely pull out of the continent. But what does that mean for South Africans?

The UK bank owns 62 per cent of Barclays Africa Group Limited, which is listed on the Johannesburg stock exchange and controls the group’s main operations in the continent – including Absa, a South African bank it bought in 2005.

If Barclays did decide to retreat from Africa it could sell BAGL shares into the market or trigger domestic consolidation by selling the stake to a local rival, such as Standard Bank, Nedbank or FirstRand.

Although Barclays had planned to rebrand the Absa branch network under its own colours after increasing its stake, the rebranding was recently shelved. Before the decision to sell its South African-listed subsidiary, talks broke down over a deal to sell its Egyptian and Zimbabwean operations to it.

The economic outlook for Africa has deteriorated this year as oil and commodity prices have fallen sharply and China’s economy has slowed. The International Monetary Fundforecasts 3.75 per cent growth for sub-Saharan Africa this year, the lowest level since 2009.

Like I said, call up Consequence. They advise you on everything you need to know right now.

[source: biznews]