Barclays completes investment in ABSA
JOHANNESBURG (Reuters) - Britain's Barclays sealed its biggest investment outside the UK on Wednesday by paying around 28 billion rand for a 54 percent stake in the country's biggest retail bank, Absa.
Returning to South African retail banking after an 18-year absence, Barclays said acquiring a controlling stake in Absa would boost its African presence and give it access to the bank's vast consumer banking experience and the high-growth local market.
"Absa is a valuable addition to the Barclays Group, bringing significant scale and expertise in the South African market, which we look forward to combining with our existing African presence," Barclays' international retail and commercial banking CEO Dave Roberts said.
The transaction -- at 27.87 billion rand the biggest foreign direct investment yet in South Africa -- was done without disrupting the local currency market.
"The goal that we and the central bank had was to ensure that there was no dislocation to the currency market and the payments market. We are satisfied today that it has been achieved," Roberts said in an interview. He declined to give further details.
South Africa's rand currency shrugged off the news that payment had been made. Analysts believe the South African Reserve Bank had taken the foreign exchange directly from Barclays, giving it rand in return to pay for its purchase.
Absa has said it aimed to be the biggest bank in Africa within five years. Its South African rival Standard Bank is currently the biggest bank on the continent in terms of assets.
Absa Chief Executive Steve Booysen said the integration of Barclays' existing South African operations with his bank was expected to be completed before the end of 2005.
"We have to consolidate Barclays South Africa and our timeframe for that is before the end of the year (but) we are starting to operate today. We are no longer in a preparation phase," Booysen said in an interview.
Barclays was the biggest bank in South Africa but sold its business for a loss after critics, including British students, aid group Oxfam and Oxford colleges boycotted the bank because of South Africa's white minority rule.
Absa is South Africa's biggest retail bank with 31,600 employees, 2,000 temporary employees, 670 outlets, 7 million customers and more than 5,100 automated teller machines. It has the country's biggest Internet banking base.
Four Barclays executives will join the Absa executive committee and Barclays' John Vitalo will head the South African bank's corporate and merchant bank division.
Vitalo is currently chief operating officer of Barclays' global rates business.
Barclays' Roberts said the appointment of Vitalo showed that the group wanted Absa corporate and merchant bank (ACMB) to be a strong competitor in the investment banking sector.
"The fact that he is coming here shows how serious we all are in making ACMB a fearsome competitor".
Absa shares, which have gained 22 percent so far this year, were 0.6 percent higher at 93.50 rand at 1311 GMT