Barclays Africa to return to its ABSA roots

Johannesburg - Barclays Africa [JSE:BGA] is going back to its roots.

The Johannesburg-based bank plans to revert back to the ABSA Group Name, as it was known before Barclays took control of the company in 2005. With the British bank’s stake now reduced to 14.9%, Barclays Africa is also embarking on a plan to double in size and capture at least 12% of banking revenues across the continent.

“We will stretch ourselves to develop the platform for double-digit growth,” chief executive officer Maria Ramos said on a conference call on Thursday. “This is a critical period in which we will need to complete our separation from Plc, build and scale new capabilities, and rebuild our organisational and cultural foundations to capture growth.”

The lender, which has operations in 12 African countries, is forging its own path after Barclays CEO Jes Staley opted to reduce the British bank’s presence on the continent in favour of a trimmed-down investment bank focused on London and New York.

With the split on track, Ramos, 59, said she will consider acquisitions to support the company’s growth, explore strategic partnerships and new markets, and use technology so the lender’s operations become fully digitised.

While Barclays Africa hasn’t set timelines for reaching the goals, it will seek to support the strategy by:

1) Creating a consumer-finance business across Africa. “We’re going to target this opportunity with our core middle and affluent customers and fully expect to grow our base here.”;

2) Building a payments hub. “Payments is a highly profitable area and is growing at 8% annually.”; and

3) Launching a transaction banking platform. “It’s going to account for two thirds of our wholesale revenue in three years. It’s fee based and has low capital requirements.”

The strategy will see Barclays Africa push to regain market share in retail, expand its corporate and investment-banking business and integrate wealth and investment into all consumer-facing businesses.

In discussions

To drive the separation from its former parent, Barclays Africa has about 360 people dedicating more than 70% of their time on the programme, which seeks to reach full deconsolidation by the first half of 2021, Finance Director Jason Quinn said on the call. Shareholders will vote on the name change at the annual general meeting on May 15.

The separation has also meant Barclays Africa is looking at ways of growing its investment-banking unit offshore, he said. This may be through joint ventures, although the company is considering going it alone.

“We’ve been in discussion with other international investment banks around the type of service offerings and products that might suit their clients and our clients,” Quinn said.

The start of Cyril Ramaphosa’s presidency in South Africa has resulted in a return of optimism, Quinn said.

Increased appetite over the past two months for mortgages, car and personal loans is expected to continue, he said. The company, which at one stage had about a third of the home-loans market, is reviving that book. It’s now getting 20% of new business and sees that increasing, he said.

South African banks have also been facing risks linked to money lent to Steinhoff International [JSE:SNH] and its directors as the retailer’s shares slumped in December amid an accounting scandal. Barclays Africa took a R300m charge related to the company.

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