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Barclays reveals restructuring plan to exit Africa as profit falls

The bank, which owns 62,3 percent of Barclay’s Africa, says the process will take over 2 to 3 years.

A file photograph dated 09 February 2009 shows a pedestrian passing a Barclays bank branch in London, Britain. Picture: EPA/Andy Rain.
Barclays Bank,Barclays Africa,Barclays Plc,Barclays Africa Group
World Business

CAPE TOWN - Barclays PLC has confirmed it will reduce its stake in Barclays Africa, as part of plans to simplify the group and boost shareholder returns after reporting a two percent fall in full-year profit.

This means that the main Barclays bank will divest out of this continent, to focus on its core UK and US operations.

Barclays, which owns 62,3 percent of Barclay’s Africa, says the process will take over two to three years.

Portfolio manager at Vestact Sasha Naryshkine said, “The results actually didn’t look that bad. It seems like pretty poor timing on their part in terms of the selling.”

Barclay Chief Executive Jes Staley said Barclays was fundamentally on the right path.

"There is of course more we need to do and areas where I believe we can move much faster to deliver the high performing Group that Barclays can and should be.”

Barclays reported an adjusted pretax profit of £5.4 billion for the year ended 31 December, compared with £5.502 billion a year earlier and below the average forecast of £5.772 billion from a consensus of analysts’ forecasts.

In the few months since Staley’s appointment, Barclays has made sweeping cuts across its investment bank and exited several businesses including in Asia to trim costs, reduce risk and shore up its balance sheet.

The bank’s common equity tier one ratio, a key measure of financial strength, stood at 11,4 percent from 10,3 percent a year earlier, while its leverage ratio improved to 4,5 percent.

However, legacy conduct issues continued to hurt.

The bank made an additional provision in the fourth quarter of £1.45 billion for misselling loan insurance, taking its total sum set aside for customer redress to £7.42 billion.

Barclays also said it is cooperating with the US department of Justice and the SEC on an investigation into its hiring practices in Asia, becoming the latest bank to disclose involvement in a wide-ranging probe.

Meanwhile, Barclays Africa reported a 10 percent rise in annual profit, helped partly by a stronger showing from its cross-border business.

The pan-African lender said diluted headline EPS totalled 1,686 cents in the year to end December compared with 1,537 cents a year earlier.

Headline EPS is the main profit measure in South Africa that strips out certain one-off items.

Additional reporting by Reuters.

(Edited by Shimoney Regter)

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