Absa being muscled out

Barclays will offer private banking services to individuals in SA, following the granting of a licence by the Financial Sector Conduct Authority (FSCA).

This, it says, means Barclays plc bankers “will now be able to proactively reach out to and meet individuals in South Africa, to offer the advisory and discretionary products and services offered by Barclays Private Bank”.

It is telling that the lead for the private bank, to be based in Johannesburg, is Amol Prabhu.

He has been with Barclays for 15 years, and most recently led the establishment of Barclays’ corporate and investment banking (CIB) services in Africa.

He continues to hold the role of market head for the continent and has responsibility for all its businesses in Africa.

Barclays had to build a CIB business on the continent again, following the protracted divorce from Absa Group.

The two operated through a single entity, effectively Absa Capital, for about a decade until the separation begun in 2017.

The key focus of the private bank in SA will be to service Barclays’ global clients across the continent. Global corporates were 15% of Absa CIB’s revenue when Barclays was still in the picture and the African bank relied on Barclays’ “global connectivity”.

It is likely that Barclays “won back” a number of its global clients since it was granted a CIB licence in October 2018.

These and Barclays’ other clients in the region demand full-service banking.

This level of banking is a relationship business, which is why Prabhu has been appointed.

Salman Haider, head of global growth markets, Barclays Private Bank, says: “We consider South Africa and the wider African continent to be an exciting growth market... We also look forward to servicing our clients seeking offshore solutions.”

Absa will struggle to compete in this space.

It was left completely flatfooted with the exit of Barclays and returned to being just a regional investment bank. Plus, its private banking offering is not set up to target family offices, for example.

To replace the reach and expertise lost has required significant investment (R1.8 billion more in 2018 and 2019) and patience.

On the CIB front, it has taken two years to open representative offices, in London and New York.

It still has nowhere near the global reach that was offered while Barclays was its parent.

Hilton Tarrant works at YFM