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Barclays to dispose Egypt ops in $500m deal; Zim could be harder to sell

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LONDON


Barclays is calling time on 150 years of history in Egypt by agreeing to sell its operations in the country to a Moroccan rival in a $500m deal that will slightly boost its capital levels and shed 1,500 staff.

Attijariwafa Bank, the biggest bank in Morocco by revenue, is buying all of Barclays’ operations in Egypt, having seen off competition from Saudi and Emirati competitors.

Barclays, which is in the process of selling its much larger South African-listed subsidiary, has been looking to offload its Egyptian and Zimbabwean operations since deciding to drastically cut back its African presence this year.

Jes Staley, who took over as Barclays chief executive late last year, has decided to focus on its UK and US operations, while selling or cutting back activities in Africa, continental Europe and Asia.

The Egyptian business has 56 branches focused on retail and corporate banking. The sale will add about 0.1 percentage points to Barclays’ common equity tier one ratio — the key measure of a bank’s financial strength.

The deal, which removes about £2bn of the £51bn of risk-weighted assets that Barclays had in its non-core unit at the end of March, is expected to close by the year end. Barclays’ Zimbabwean unit is likely to be much harder to sell.

The bank is in talks to sell its French arm to a private equity group and aims to shrink its non-core unit to £20bn by the end of the year and to fold the division back into the rest of the group early next year.

Staley said: “I am pleased to announce a further reduction in our non-core business. Today’s announcement demonstrates our continued focus on improving the group’s returns and our ability to execute our strategy quickly.”

Barclays first established a presence in Egypt in 1864. It expanded its operations in the country through a joint venture with Banque du Caire 30 years ago before steadily taking full control over the past two decades.

In May, Barclays sold the first chunk of its 62 per cent stake in its African unit via a R13bn ($946m) placing with institutional investors. It was then restricted from selling more shares for 90 days under a lock-up agreement that expired in August.

Having given itself until 2019 to complete the African sale, Barclays has consistently expressed confidence that it could sell the rest of its shares on the open market if no strategic bidder materialised. Its former boss Bob Diamond is one of the potential bidders that has expressed an interest. However, it was reported last month that Diamond’s quest for Barclays’ African assets had suffered a setback after US private equity group Carlyle pulled out of the consortium.

But Barclays is widely expected to push ahead with the African disposal as fast as possible, favouring a sale into the market rather than an outright disposal, which could be bogged down with regulators. It is likely to keep a stake of 10 to 20 per cent in the South African-listed operation. – Agencies

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