Barclays’ withdrawal ‘is bad news for SA’
South Africans need to be worried when big investors start leaving the country, warn economists.
|||Cape Town - Although Barclays PLC’s plan to pull out of Africa is unlikely to have a big impact on operations in South Africa in the short term, it is bad news for the country when investors pull out.
Dawie Roodt, chief economist at the Efficient Group, said clients would not be affected. “But we all need to be worried about big investors leaving South Africa. It is not good news for South Africa.”
Read: Barclays on the right path - Staley
Roodt said policy uncertainties and political issues, including the firing of former finance minister Nhlanhla Nene, all contributed to the decision.
Barclays Africa group chief executive Maria Ramos said: “It is not a reflection on our business, our strategic direction or the performance of the economy in South Africa. Our future as Barclays Africa is very bright and our ambition to be Africa’s leading bank remains unchanged. We are a strong, well-capitalised and independently funded business. With our destiny firmly in our hands, the way is now clear for us to shape an exciting future, using our strong balance sheet to invest for growth.”
Yesterday, Absa sent SMSes to clients reassuring them about the decision: “You will not be impacted in any way. Absa is here to stay. Our financial results show solid growth.”
Ian Cruickshanks, chief economist at the South African Institute of Race Relations, also said bank clients need not worry as they would not be affected – the South African authorities would not allow them to be impacted by the decision.
Cruickshanks said the reason for the decision to withdraw could be that Barclays couldn’t get a sufficient return on their capital to justify staying.
“It could lead to others taking the same decision. It is a sad day for South Africa.”
Andre Botha, dealer at TreasuryOne said: “In terms of the rand, the effect in the short term will probably be minimal, as the pull-out from Barclays will be gradual over two to three years and will be sold to suitable buyers.”
Barclays PLC chief executive Jes Staley, announced in a statement yesterday that the company would 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 the regulatory pressures the firm faced, including the level of capital they are required to hold in respect to their shareholding in Barclays Africa.
Barclays PLC owns 62.3 percent of Barclays Africa. Barclays Africa, in turn, owns varying levels of interest in Barclays Africa operations on the continent.
Barclays Africa said the announcement by the parent company did not affect Barclays Africa’s shareholding in its African operations.
A Barclays Africa spokesman said the bank would be working closely with Barclays to evaluate options for the divestment that was in the best interest of its stakeholders.
“We don’t envisage there being any operational change or any impact on staff. It will largely be business as usual. We have always been a standalone business and we will continue to be their (Barclays PLC) partner in Africa.”
The spokesman said the decision was not a reflection on Barclays Africa’s business, its strategic direction, or the performance of the economy in South Africa.
“Following the announcement, Barclays PLC and Barclays Africa will now work together on the next steps and will engage with its key stakeholders.”
joseph.booysen@inl.co.za
CAPE ARGUS