Barclays acquisition of Absa

Barclay’s Bank of the UK will buy a majority share of Absa, South Africa’s largest retail bank. The move comes after months of negotiations.

The South African bank has been active in seeking the business of the fully 50 percent of South Africans who do not have bank accounts. It also has operations in Angola, Tanzania, Mozambique, Zimbabwe, and Namibia, and is in negotiations to acquire a stake in a Nigerian bank.

Absa has almost 700 outlets, over 4,500 cash machines, and employs about 30,000 staff. Barclay’s does not have plans to close any branches.

Some critics have expressed concern that Barclay’s involvement with Absa could expose the bank to greater economic risk than is acceptable. Barclay’s position is that the acquisition will be of benefit to shareholders and estimates R4.1 billion ($232 million) is cost savings and revenue benefits over four years.

The acquisition means that Barclay’s will be generating half its earnings from overseas operations. About 10 percent of its earnings will come from Africa, up from 2 to 3 percent before its involvement with Absa.

The acquisition of Absa is a return to South Africa for Barclay’s after an absence since 1986, when it withdrew during the anti-apartheid sanctions. Previously the bank had done business there since the days of the British Empire.

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