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Barclays completes selldown of Africa unit as it cuts stake by more than expected

Last updated: 10:00 01 Jun 2017 BST, First published: 07:36 01 Jun 2017 BST

Barclays
Proceeds from the disposal will be used to bolster the bank's capital position

Barclays plc (LON:BARC) has completed its planned selldown of its Africa division by offloading £2.2bn worth of shares in the business.

The bank sold off a bigger stake than expected, reducing its holding in Barclays Africa Group to its target of 15%.

Barclays said it disposed a 33.7% interest in the business, compared to the 22% it had outlined a few hours earlier, due to strong demand from institutional investors.

The disposal, which was approved by the South African government, comes as the bank streamlines the business to focus on its UK and US businesses.

It will be seen as a major achievement for chief executive Jes Staley, who has led the restructuring of the bank since taking the top job in December 2015.

 

Sale of Barclays Africa stake to boost capital position.... 

Offloading its stake in Barclays Africa will raise funds that can be used to lift the group’s capital position after a Bank of England stress test last year showed it had “some capital inadequacies”.

The deal will immediately add 27 basis points to its common equity tier one ratio, which was 12.5% in March, below some of its peers.

Barclays said the sale of its shares will result in its African business being deconsolidated from its accounts.

 

Deal to result in loss for Barclays...

However, the deal will result in an estimated loss of £1.2bn due to a weaker South African rand against sterling since it consolidated the unit in 2005.

The shares were priced at 132 rand a share, a 5% discount to Wednesday's closing price of 139 rand.

The loss will be included in the interim results but will not affect the lender's capital position. 

South Africa’s Public Investment Corporation, the government pension fund manager, agreed to buy a 7% stake in the Africa business in the offering on top of its existing 7% holding.

The bank announced its intention to sell its holding in Barclays Africa down to less than 20% in March 2016, giving itself two to three years to complete the disposal.

Barclays sold 12% of its 62.3% stake last May but had struggled until now to sell more shares due to regulatory delays and political upheaval in South Africa.

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