‘Barcsa’ must not focus on Africa to the detriment of home markets

THE vision of Absa as Barclays’ Africa division is being implemented full-speed ahead, even though regulatory gremlins are causing delays.

It promises the delays will not be fatal, so it is not faltering in its unification strategy. The branding evolution is at that awkward phase when we all know it is going to become Barclays, but the bank is trying to let down the Absa loyalists easy.

So let us borrow the strategy often used when describing celebrity couples and coin a neologism: Barcsa.

Barcsa is the one to watch in Africa. Investment banking is where Barcsa will have the biggest effect, at least at first.

Far away in SA we forget that Barclays was transformed when it took over the US operations of Lehman Brothers during the financial crisis. It got a hell of a good deal, including a wad of new skills in the one area Barclays had always struggled with: equities. Barcsa has been moving strongly into Standard Bank’s traditional turf by grabbing market share in commodities and currencies trading. It has also ensured that it has maintained its long-time dominance of debt issuance.

But if I were Standard Bank, Morgan Stanley, RMB and Standard Chartered, it is the equity space I would be worried about. Global investors are eager for African equity exposure to the right sort of companies. An investment bank with great distribution and great access across Africa is going to be well positioned. Of course, its existing strengths in debt and commodities are going to help.

Barcsa has access to unrivalled New York and London investment banking teams to help land it deals across Africa.

It can also raise cash in both financial centres with second-tonone distribution capabilities.

The message is being driven hard in both cities that Africa is now 25% of Barclays’ business. Barcsa has also been on a hiring spree, attracting investment bankers from rivals to create an impressive leadership team. But it is not all good news.

Too much focus on a regional vision can mean a lack of focus on home markets. Barcsa continues to lose retail market share in SA. I’m sure it made for uncomfortable reading down at Absa Towers that Barcsa is responsible for the biggest share of complaints to SA’s Banking Ombudsman.

The poor performance of its home loan book has ensured the bank has been the worst performer of the big four in profit growth. I have no doubt CE Maria Ramos’s legacy at the bank is going to be a strident Africa strategy, but that cannot come at the expense of the bank’s South African performance.

While it has stolen many ideas and people from Standard Bank, the one it has not is to separate management teams for SA and global business. Ms Ramos is both head of Absa and the Barclays exco member responsible for Africa. Kennedy Bungane is both head of Barclays Africa and head of strategy at Absa.

So Barclays Africa and Absa are deeply intermingled in the job descriptions of the leadership.

That may make Barcsa more co-ordinated, but it shifts the limelight off the South African part. If I were Barclays, I would be on the lookout for a new CE for SA.

SINCE we exposed Sherbourne in Business Day Investors Monthly, my inbox has been filled with e-mails from shareholders wondering if they have lost everything. Their stories are similar: the tip-off round the braai from someone who knows a guy who knows about some secret iron-ore discovery, or whatever.

We will never eliminate lying from business. But where it is found, it must be prosecuted to the fullest extent.

Judging from prosecutors’ apparent lack of interest in highprofile cases such as Alliance Mining and African Dawn, I do not hold out much hope they will pursue vigorously those involved in Sherbourne. Though I am eager to be proved wrong.

Meanwhile, Sherbourne looks set for a second life. A curious change in leadership occurred last week. CEO Sagie van Niekerk is out, and in comes Johnathan Bangura, a US national who is also head of the nascent Sierra Leone stock exchange. Sherbourne has been little more than a cash shell, so it is a blank slate for someone to do with as they please, provided they can get out of the lingering liabilities the previous management had incurred. I look forward to seeing what happens.