Bar­clays to exit Africa in 'transat­lantic' makeover

The Pak Banker - - COMPANIES/BOSS -

Bar­clays Plc will sell its Africa busi­ness as part of a plan by new Chief Ex­ec­u­tive Jes Sta­ley to sim­plify the bank's struc­ture and seek higher share­holder re­turns, af­ter re­port­ing a 2 per­cent profit drop and slash­ing its div­i­dend.

The Bri­tish bank said on Tues­day it planned to sell its 62 per­cent stake in Bar­clays Africa Group (BGAJ.J) over the next two to three years, end­ing its pres­ence on the con­ti­nent af­ter more than a cen­tury and be­com­ing a "transat­lantic" bank fo­cused on the United States and Bri­tain.

It would then con­cen­trate on two divi­sions, Bar­clays UK and Bar­clays Cor­po­rate and In­ter­na­tional, to com­ply with ring-fenc­ing reg­u­la­tions aimed at safe­guard­ing its retail bank­ing busi­ness from riskier op­er­a­tions. Bar­clays is "fun­da­men­tally on the right path," Sta­ley said in his first re­sults an­nounce­ment since tak­ing over one of the most prom­i­nent roles in Bri­tish busi­ness in De­cem­ber.

Ad­justed pre­tax profit fell to 5.4 bil­lion pounds ($7.5 bil­lion) for the year to Dec. 31 from 5.5 bil­lion a year ear­lier, below an av­er­age fore­cast of 5.8 bil­lion.

The bank said it was cut­ting its div­i­dend to 3 pence per share from 2016 from 6.5p in 2015, a move Sta­ley said would help Bar­clays main­tain cap­i­tal lev­els while it dis­poses of un­wanted as­sets. Its shares fell as much as 10.5 per­cent.

Sta­ley told re­porters he was com­fort­able with the bank's cap­i­tal po­si­tion, dis­miss­ing some con­cerns that Bar­clays might need a cash call to bring its com­mon equity Tier 1 (CET1) ra­tio, a key mea­sure of fi­nan­cial strength, closer in line with ri­vals. The bank's CET1 stood at 11.4 per­cent, from 10.3 per­cent a year ear­lier, while its lev­er­age ra­tio im­proved to 4.5 per­cent.

"While we be­lieve that the cut in div­i­dend will be taken neg­a­tively ini­tially, it will help to al­lay fears of cap­i­tal weak­ness," an­a­lysts at Haitong Re­search wrote.

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