Barclays Africa CEO Maria Ramos speaks at the group’s  results presentation on Tuesday. The lender’s stock rebounded on good performance  even after its parent   said it would reduce its 62% stake  to less than 20%. Picture: MARTIN RHODES
Barclays Africa CEO Maria Ramos speaks at the group’s results presentation on Tuesday. The lender’s stock rebounded on good performance even after its parent said it would reduce its 62% stake to less than 20%. Picture: MARTIN RHODES

BARCLAYS Africa on Tuesday said it would not be deterred from expansion on the rest of the continent despite its parents’ shareholding in the African operation falling to about 20% in two to three years.

The local unit’s strategy included acquiring an insurance firm in Ghana and a securities licence in Nigeria this year.

Barclays Africa CEO Maria Ramos on Tuesday vowed that the group would continue to invest as it had done since 2013, despite the sell-down by Barclays Plc.

Management still had ambitions to build a big pan-African bank, she said.

Barclays Plc’s shares in London fell over 10% after it posted an 8% decline in profits to £2.1bn for the year ended December. It closed down 8.11%.

Barclays said its dividend in the 2016 and 2017 financial years would be cut by more than 50% to 3p per share from the 6.5p in 2015.

By contrast, Barclays Africa’s shares rose more than 4% and ended the day 2.12% higher to R138, boosted by what analysts said were good results.

Ms Ramos emphasised that Barclays Africa was well capitalised and independently funded with a balance sheet of over a R1-trillion.

Last year Barclays Africa scaled up its bank assurance business by buying into Kenyan insurer First Assurance.

Barclays Africa deputy CEO David Hodnett told Business Day there were licences that the company expected to get soon in Nigeria. "Getting your ultimate corporate banking licence might take longer versus being able to get a securities licence. We are hoping within this year that we would be able to start (trading equities and currencies)," Mr Hodnett said.

Barclays Plc said that over the next two to three years it would reduce its stake in Barclays Africa from the 62.3% to levels that would enable it to "deconsolidate it from an accounting and regulatory perspective".

Asked how much the shareholding was expected to be, Ms Ramos said: "I expect that it’s going to be something in the ballpark of 20% or marginally lower."

Global banking regulatory pressures pushed Barclays to sell to 20% or below.

With its current shareholding in the African operations Barclays had to carry 100% of the risk, including liabilities at Barclays Africa, even though its stake was 62.3%. This affected the return on equity from its Africa operations.

For the year, Barclays Africa reported a return on equity of 17% in rand terms but this dwindled to 8.7% for its parent.

The decline of the rand also had an effect on returns.

The tough global regulations could make it harder for other global banks that may have had an interest in acquiring a majority stake or shareholding way above 20% in Barclays Africa.

Asked if sentiments around SA had anything to do with the Barclays sell-down, Ms Ramos replied emphatically "absolutely not".

With many of the African operations branded Barclays, questions remain about their naming. "On the issues of brand, when we did a deal with Barclays in 2013 we got as part of that deal a number of agreements," Ms Ramos said. "Now that this decision has been made part of the engagement with Barclays is going to be how we deal with that. So I don’t know what that’s going to look like."

When the deal with Barclays Plc was done in 2013 to up it stake to 62.3%, the parent committed to investing in the information technology systems at Barclays Africa.

Mr Hodnett said the agreements were contractual and did not depend on shareholding. This included £30m of investments over a five-year period on technology. "We are on the third year of it so we still got two more years of getting £30m from Plc (Barclays).

For the year ended December 2015 Barclays Africa said its headline earnings grew 10% to R14.3bn.

Headline earnings from the rest of Africa operations were up 17% to R2.3bn, growing faster than SA where the increase was 8% to R12bn.

Barclays Africa’s dividend rose 8% to R10 per share. Credit impairments grew 10% to R6.9bn.

"Operational performance was solid," Jihad Jhaveri, investment analyst at Kagiso Asset Management, said.

Mr Jhaveri said Barclays Africa enjoyed some advantages as part of the larger group. "The Barclays brand is powerful … and is a reason behind their strong deposit franchises in Africa," Mr Jhaveri said