Barclays purchases majority share in Absa

| May 9, 2005 | 0 Comments
Barclays purchases majority share in Absa

UK bank Barclay’s has concluded negotiations to purchase a majority share of Absa, South Africa’s largest retail bank.

This is a return to South Africa for Barclay’s, which had done business in the country since the days of the British Empire but had left in 1986 in the days of anti-apartheid sanctions.

With the acquisition, Barclay’s will generate half of its earnings from overseas operations, with about 10 percent coming from Africa, up from 2 to 3 percent.

While some critics have said that the purchase could expose Barclay’s to greater than acceptable economic risk, the bank says that the acquisition will benefit shareholders and predicts R4.1 billion ($232 million) in cost savings and revenue benefits over four years.

Absa has almost 700 outlets and over 4,500 cash machines, with around 30,000 staff. Barclay’s does not plan to close any branches.

Absa has actively sought the business of the half of South Africans who do not have bank accounts. Besides its South African operations, Absa has holdings in Angola, Tanzania, Mozambique, Zimbabwe, and Namibia. It is currently negotiating to buy a stake in a Nigerian bank.

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