Barclays makes early African exit with $2.8 billion share sale

LONDON/JOHANNESBURG (Reuters) - Barclays BARC.L cut its stake in Barclays Africa Group BGAJ.J to 15 percent sooner than expected on Thursday, ending more than 90 years as a major presence in the continent.

The British bank, which under Chief Executive Jes Staley is firmly focused on Britain and the United States, said it was selling 2.2 billion pounds ($2.83 billion) worth of shares in its African business due to strong investor demand.

Barclays had said on Wednesday it would sell shares worth 1.5 billion pounds in its second rapid share sale since saying it would largely get out of Africa.

The bigger figure lifted shares in Barclays, which is partly relying on the funds to meet capital requirements identified as a concern by the Bank of England. At 1216 GMT, the shares were up 0.2 percent, while Barclays Africa was up 4.6 percent.

Barclays said that once the business is deconsolidated from its accounts, the sale should eventually boost its core capital ratio by 73 basis points, although it will lead to an initial 1.2 billion pound loss.

Ian Gordon, an analyst at Investec, called the deal “utterly transformational” for Barclays’ capital position, which in turn offered opportunities for earning enhancement.

OWN DESTINY

The split hands full control of Barclays Africa to its chief executive Maria Ramos.

The bank operates across Kenya, Botswana, Tanzania and Ghana, and is one of South Africa's 'big four' along with Standard Bank SBKJ.J, Nedbank NEDJ.J and FirstRand and Ramos now has to steer it through a tough economic and political environment, with no support from its deep pocketed parent.

South Africa, Africa’s most industrialized economy, lost its highly prized investment grade sovereign credit ratings in April, causing knock on downgrades to its banks.

But Ramos, who dealt with the fall out from global financial crisis when she took over at Barclays Africa in 2009, said the share sale, South Africa’s biggest ever rand denominated bookbuild, was “substantially oversubscribed”.

“This not because we’re nice people, although we’d like to believe we are, but testament to the quality of our franchise,” Ramos told a news conference.

Ramos, ranked 20th in Fortune Magazine’s 50 most powerful women outside the United States list for 2016, said she had no immediate plans to expand beyond the bank’s current footprint.

U.S., BRITAIN FOCUS

Barclays first announced in March 2016 that it would sell most of its 62.3 pct stake in Barclays Africa over two to three years. Its sold 12.2 percent in May 2016, but had since been hindered by regulatory delays and political upheaval.

Since taking over 18 months ago, Staley has scaled back the bank’s geographic footprint and emphasized investment banking, although his attempts to revitalize this have been clouded by U.S. and British investigations.

Staley has also faced investor criticism following his attempts to unmask a whistleblower, which Barclays insiders fear could unseat him if the findings of inquiries are damning.

Barclays faces other regulatory obstacles, with an ongoing probe by Britain’s Serious Fraud Office (SFO) into its 2008 cash call at the height of the financial crisis and allegations by the U.S. Department of Justice (DOJ) over mortgage mis-selling.