Barclays confirms Africa sell-off, share price plummets
UK banking giant Barclays has confirmed it will sell its entire Africa business over the next two to three years, after seeing before tax profit fall to $5.4 billion, down 2% on 2014 figures.
The core part of the sell off will involve the Johannesburg Stock Exchange-listed Barclays Africa Group Limited (BAGL), in which Barclays has a controlling 62.3% stake.
Announcing the bank’s 2015 results on Tuesday, chief executive Jes Staley said: “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, to a level which will permit us to deconsolidate it from an accounting and regulatory perspective, subject to shareholder and regulatory approvals if and as required.”
He continued: “The stake in BAGL presents specific challenges to Barclays as owners, such as the level of capital held in respect of BAGL, the international reach of the UK Bank Levy, the GSIB buffer, and MREL/TLAC and other regulatory requirements.”
Along with South Africa, BAGL has subsidiary operations in Kenya, Botswana, Ghana, Zambia, Mauritius, Mozambique, Seychelles, Uganda and Tanzania. Barclays said it would exit all markets.
Despite seeing modest declines across most metrics, Barclays retained the same dividend rate as 2014 – 6.5p per share. However, Staley said he intends to reduce dividend to 3p per share in 2016 and 2017.
Following the announcement, the Barclays share price plummeted by more than 10% in the first hour of trading.