Barclays CEO: Jes Staley has created panic


Since Barclays Bank Chief Executive Jes Staley assumed office, he has created fear and panic within Barclays.

He wants to conserve capital to meet new regulatory requirements, hence his decision to abandon certain territories like Africa.

But, from where I am looking, it seems like Staley’s decision is economically good for Barclays but psychologically bad for its clients.

The British lender announced its plans to sell its 62 percent stake in Barclays Africa Group valued at US$4.5billion.

About 80 percent of Barclays Africa Group profits come from South Africa (SA).

Since, the slump in commodity prices and slowdown in China, South Africa has been struggling to attract meaningful foreign direct investment.

Lumkile Mondi, a senior lecturer at the School of Economic and Business Sciences at the University of Witwatersrand in Johannesburg said: “South Africa has policy uncertainty, there’s indecision; the growth that was expected in the medium-term now doesn’t look possible”.

It has become bad news that British parent Barclays – which re-entered SA with much fanfare in 2005 — is leaving. 

Now there are fears over investors pulling out from Barclays; and although clients may not be affected, it is still a huge psychological worry.

This is why Barclays Bank of Uganda Ltd., like Barclays Ghana, assured its customers that it will not be affected by changes of its main shareholder — Barclays Africa Group Ltd. (BAGL).

Rakesh Jha, Managing Director Barclays Uganda, told journalists in Kampala last Tuesday that there is no direct relationship between the London-based firm, Barclays PLC, and Barclays Bank Uganda Ltd.

BAGL is the principle shareholder of Barclays Bank Uganda Ltd.

“The whole thing has become a dreary, defensive snooze-fest and excruciatingly illogical, because we have all done business with Barclays Africa with the contentment that its parent company is in the UK.

However, putting the stories together is like mixing scrambled-eggs with peanut butter and pudding; a thoroughly distasteful mash-up of epic proportions.”

Jes Staley, on seeing the mood surrounding his decision, has come out again to explain in a statement that: “The company will reduce its shareholding in Barclays Africa over the course of two to three years, to a non-controlling stake of 50 percent and below”.

Staley said the decision had been driven entirely by regulatory pressures the firm faced, including the level of capital it is required to hold in respect of their shareholding in Barclays Africa.

The Barclays Africa story is poignant, because announcing the firm will sell its stake of 50 percent and below does not depict a complete sale.

So why send the signal that there is going to be a total Barclays PLC pull-out from Africa?

Barclays PLC bought a 55 percent stake in South African bank Absa in 2005 for US$5.5billion later increasing it to a 62.3 percent stake and rebranding Absa as Barclays Africa in 2013.

It has 12 million customers across 12 countries including South Africa, Kenya, Botswana, Ghana, Zambia, Mauritius, Mozambique, Seychelles, Uganda, and Tanzania.

Barclays Africa seem to be assuring everyone that Staley’s decision to sell its African stake will not affect the ‘autonomous’ subsidiaries; meanwhile, an Attijariwafa Bank — Morocco’s largest bank by assets — senior executive told Reuters that when Barclays opens up, it plans to bid for Barclays-Egypt .

The General Manager, Ismail Douiri, said in an interview on the sidelines of an event in Dubai: “Egypt we will look at, and we have already signalled that to Barclays.

Once the competitive process starts, we hope to receive the documents and decide accordingly.

The bank is also examining Nigeria for acquisition opportunities,” he added.

Attijariwafa Bank’s reason is Egypt and Nigeria are among the largest banking markets in Africa, with populations of around 90 million and 170 million, respectively

So if the assurances by Barclays Africa subsidiaries — Ghana and Uganda — that staley’s position will not affect their entities are true, why then is Attijariwafa Bank waiting on Barclays PLC to make a bid for Barclays Egypt and Nigeria?

Perhaps Staley may have to come again and reveal the sort of information that might allay fears and prove absolutely crucial to Barclays Africa’s clients’ security.

Without a doubt, Jay Staley’s public announcement without proper explanation has created panic.

Source: B&FT Online