On Tuesday, a source familiar with the United Kingdom-based lender, Barclays Bank Plc, told Reuters that the bank has commenced the official process to sell its Egyptian unit. So far, about two banks in the Middle East and North African (MENA) region have expressed their interest in the business.
This comes two months after Barclays Plc. sold 12.2 percent of its shares in the Barclays Africa Group for about 13.1 billion Rand ($879 million), leaving the bank with a 50.1 percent share. It will also be recalled that in May, the company announced its intentions to divest part of its 62 percent stake in Barclays Africa to a level, which would permit it to de-consolidate Barclays Africa from a regulatory perspective.
Banks have been invited to submit their bid for Barclays Egypt, whose equity is valued at $400 million. According to Reuters, the banks that have indicated their interest are Dubai-based Emirates NBD and Moroccan Attijariwafa Bank. Both banks are the largest banks by assets for United Arab Emirates and Morocco, respectively.
Barclay’s operations in Africa
In 2005, Barclays bought a majority stake in South African bank, Amalgamated Banks of South Africa (Absa), building on a steady stream of acquisitions. Absa was consolidated with several of its African businesses across the continent. Former CEOs of the bank, including Bob Diamond and Antony Jenkins, were hooked on Barclays’ unique African footprint. Diamond, who resigned in 2012, outlined a “One Bank in Africa” strategy, pointing to the huge population growth in the region and its expanding middle class. He has co-founded his own bank, Atlas Mara, which is now expanding across sub-Saharan Africa at an enviable rate.
Barclays’ exit plan from Africa is a symbolic reversal, which has been operating in Africa for almost a century, making it one of the leading Western banks in Africa, along with Citigroup Inc. and Standard Chartered PLC. It is one of Africa’s largest banks employing about 44,000 people and running 1,267 branches across the continent and it is currently in 14 African countries including Nigeria, Egypt, Namibia, Mozambique and Kenya. According to its 2014 report, the company’s pre-tax profit slipped 7.7 percent in the third quarter, compared with increases at the credit-card and personal and corporate-banking divisions. The region reported a return on equity of 9.7 percent in the third quarter as well, which is below the bank’s target of at least 11 percent. Barclays’ African business had 36 billion pounds ($54 billion) worth of assets on a risk-adjusted basis and made a profit of 791 million pounds in the first nine months reported.
