Barclays to use its status to attract ‘global Africans’
Barclays is looking to bank what it calls “global Africans” as it leverages its more than 330year-old pedigree and status as a British universal bank to tap into new growth opportunities on the continent in the wake of its separation from Absa.
After selling half of its almost 15% remaining stake in Absa for £526m (R10.32bn) towards the end of April 2022, the UK banking giant retains about 7.4% of SA’s fourth-biggest bank, a stake it is now in a position to offload though it has not announced plans to do so as yet.
Amol Prabhu, CEO of Barclays SA and the market head of its Africa operations, says he is not aware of any plans to sell the remaining Absa stake yet, because he is not privy to those decisions — which are run out of London. But he says his focus is entirely on growing the UK lender’s Africa franchise.
“We do not play locally — that’s not where we add value to clients,” Prabhu told Business Day in an interview. “We help SA and other African clients with their global banking needs and we obviously also help global clients looking to come to Africa. If we’re looking at global
Africans they want global banking and global perspectives.”
A major coup for Barclays’ African ambitions has been the agreement it signed with Credit Suisse announced in February, which will see the Swiss lender refer its private banking clients in nine countries on the continent to its UK counterpart.
As part of a strategic exit from much of the Sub-Saharan region, Credit Suisse will offload its noncore wealth clients in Nigeria, Ghana, Ivory Coast, Botswana, Zambia, Tanzania, Kenya, Mauritius and the Seychelles to Barclays, though it will retain its SA operations.
Prabhu is reluctant to say just how many clients the deal could net Barclays in the rest of Africa but says the number is significant. At the time the deal was announced Bloomberg reported that it could see Barclays take over the management of about $2.5bn of assets held by wealthy Africans.
“I cannot underestimate how significant this is for our franchise,” Prabhu says of the Credit Suisse deal. “It’s a significant number of clients across both East and West Africa.”
The Credit Suisse business is likely to be a boost to Barclays’ ambitions to bank the “global Africans” Prabhu speaks of, namely the continent’s wellheeled citizens who want to internationalise their wealth, business and personal reach.
Barclays will be relying on the two main divisions of its private client business — international banking and private banking — to service this globally focused African client base.
By “international banking” Barclays means clients who have between £250,000 and £5m in investable assets, essentially making this category its “mass affluent” client segment.
To put that in perspective, FNB defines mass affluent clients as those earning between R450,000 and R850,000 a year, so Barclays is targeting a far wealthier customer subset.
But the real prize for Barclays in terms of its African private banking aspirations is clients with investable assets of more than £5m. By definition that puts high-net worth and ultra-high net worth individuals as well as family offices firmly in its sights.
Corporate and investment banking are the two other obvious targets, with the latter offering lucrative opportunities to earn fees from services ranging from deal structuring in mergers & acquisition to helping clients
raise funds from both the equity and debt capital markets. Investment banking also feeds directly into Barclays’ corporate banking offering, where again it plans to leverage its international positioning to lure home-grown African businesses with global ambitions as well as multinational businesses looking to enter African markets.
Prabhu says this is where he feels Barclays can outcompete its local rivals, many of whom are able to offer very competitive working capital, trade finance and transactional banking capabilities as part of their own corporate banking offering. What they lack is Barclays’ international status and UK banking pedigree.
“Global banks should be able to provide you with a far higher quality and depth of service than a local bank with a global office,” he says. “When it comes to that proposition I don’t think there are many local banks that can compete with us.”
Barclays has no physical offices in Africa other than the one in Johannesburg, which employs 15 people. However, Prabhu says Barclays has about 100 client service personnel servicing Africa, most of whom are based in London, though some are in Switzerland, Dubai and Singapore.
In terms of geographic focus Barclays is looking to the big three regional economies of SA, Kenya and Nigeria to accelerate its push into Southern,
East and West Africa with a specific emphasis on Englishspeaking markets.
“We have real emotional pull in Anglophone Africa. We’ve been here over 100 years,” says Prabhu. “That’s where we’ve got the history, we’ve got the depth and we’ve got the brand.”
On a personal note Prabhu, who relocated to SA in 2019 after Barclays received its rep office licence from the Reserve Bank, says he has no immediate plans to relocate despite the interview occurring on the same day as stage 6 load-shedding being announced. With Barclays also having received its Financial Advisory and Intermediary Services licence in 2020 after Covid-19 had taken hold, he is keenly looking forward to calmer waters ahead.
“We’ve just come through this two-year black swan event so I see 2022 as the real opportunity to accelerate the growth of the franchise,” he says.