, Barclays’s plan to scale back its Africa operations is linked to global regulatory challenges, not unfavourable economic conditions on the continent, the bank’s Africa chief executive has told AFP.
“We did not make this decision because of the economic cycle,” Maria Ramos said in an interview in Johannesburg late Thursday.
“The regulatory environment has changed globally and it’s more difficult for large banks to hold on to subsidiaries like ours,” she said.
The British lender early this month announced that it will sell down its 62.3 percent interest in Barclays Africa to just 20 percent over the next two to three years, fuelling speculation over the decision.
“We are at the beginning of that process but since the announcement a week ago, there has been a lot of interest,” said Ramos.
The lender said it would now focus on its two core markets, Britain and the US.
Barclays Africa Group Limited (BAGL) has insisted however that it remained committed to the continent, where it has a presence in 12 countries, with assets valued at $3 billion.
South Africa, the continent’s most advanced economy, is Barclays Africa’s major market.
The bank re-entered South Africa in 2005, after it acquired a 55.5 percent in one of the country’s four largest banks, ABSA.
The acquisition marked its return to the market it left in 1986, at the height of apartheid.
The purchase was at the time the largest acquisition of a local bank by a foreign bank.
‘We are not going’
Ramos was upbeat about the state of the South African economy, which represents the majority of revenues for Barclays Africa.
“South Africa is still a significant economy of this continent, it’s a large economy of this continent,” she said, shrugging off suggestions that the country’s slow economic growth might have contributed to the bank’s exit.
“I remain exceedingly positive over the medium to long term. This economy has gone through many many things.”
“We see enormous potential on the African continent. We have a very strong franchise with very good results.”
South Africa, which is lauded for its sound banking system, is experiencing poor growth. The economy is expected to grow less than one percent in 2016, mainly due to lower commodity prices, after 1.3 percent growth last year.
Ramos said the African subsidiary, which has as independent board of directors, would remain in South Africa, where the company is listed on the Johannesburg Stock Exchange.
“Barclays has a long history in Africa, nearly a 100 years. We are not going,” she said.
“We still see enormous potential in Africa and we have a strong franchise with good results.”
But this month the giant lender revealed annual losses after tax of £394 million ($549 million, 505 million euros).
Ramos stated that the return on equity of the African subsidiary was halved due to the burden on the parent bank.
The bank also said it was looking into “suspected money laundering related to foreign exchange transactions in South African operation Absa Bank Limited”.
In January, Barclays also announced plans to exit Russia.