* Barclays increases Absa stake to 62.3 pct
* Egypt, Zimbabwe operations not included
* Absa shares gain
By Helen Nyambura-Mwaura
JOHANNESBURG, Dec 6 South Africa's biggest
retail bank Absa, majority-owned by Barclays Plc
, has reached an all-share deal to acquire the British
bank's operations in Africa to allow it to expand on the
continent and catch up with rivals.
As part of a $2.1 billion deal first outlined in August
Barclays will raise its stake in Absa, South Africa's
third-largest bank by value, to 62.3 percent from 55.5 percent.
Absa had been prevented from expanding into Africa as its
parent was already operating in the region, effectively ceding
some lucrative markets to bigger rivals such as Standard Bank
Absa will be renamed Barclays Africa Group Ltd but will
retain the Absa brand for its retail and card business in South
Africa once the transaction is completed in the first half of
next year, the banks said in a joint statement.
Barclays plans in the region were revealed in August as a
"One Africa" strategy and a platform for further growth.
Some of Barclays' operations that will be folded into Absa
as part of the deal have been running for close to a century and
cover Botswana, Ghana, Kenya, Mauritius, Seychelles, Tanzania,
Uganda and Zambia.
Barclays first mooted the idea of selling its African assets
to Absa when it acquired the lender in 2005, but the pair
couldn't agree on price.
"The big benefit is they get a business that is up and
running," Afrifocus Securities analyst Johann Scholtz said. "It
places Absa on equal footing with the likes of Standard Bank."
The Egyptian and Zimbabwean businesses were left out of the
18.3 billion rand transaction and Barclays units in Kenya
and Botswana will retain their listings on
"Initial impressions are that the price they (Absa) are
paying for it is not overly demanding. It's about 1.7 times
book, which is pretty much in line with where Absa itself is
currently trading," Scholtz said.
Absa CEO Maria Ramos said the transaction was unlikely to
lead to job cuts though there will be board changes at Absa.
"We've already done over the last year and a half a lot of
work on pulling our operations together. We are not doing this
to cut jobs," she told journalists on a telephone conference.
South Africa's "Big Four" lenders have been extending their
reach north hoping to hedge against competition back home and
dwindling fortunes in developed markets.
Standard Bank has scaled back from Latin America and Europe
to concentrate on its 17 African businesses, while FirstRand is
trying to expand its reach past the seven countries it already
operates in and into Ghana and Nigeria.
Nedbank, the smallest of the four, is in a
strategic partnership with Ecobank that could see it
take up a stake in the pan-African lender.
Absa shares gained 4.6 percent to 148.27 rand at 1009 GMT,
while those of Barclays were up 1.7 percent.
Absa shares have lagged those of rivals, growing only 5
percent year to date, compared with nearly 50 percent for
FirstRand and 25 percent by Nedbank.