Barclays Heads Out of Africa

By Max Colchester Features Dow Jones Newswires

Barclays PLC said Wednesday it will sell a large of chunk of its African unit after regulators signed off on the long-awaited deal.

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Barclays said it would cut its stake in Barclays Africa Group Ltd. to around 28% from 50.1% currently. The share sale is expected to generate GBP1.6 billion, which should ease capital concerns swirling around the lender. The South African pension fund Public Investment Corporation SOC Limited will be an anchor investor in the sale which is currently under way, the bank said.

Back in 2016, Barclays Chief Executive Jes Staley pledged to end Barclays's century-long presence in Africa to drum up funds that could be redeployed to other parts of the franchise. The bank spent the past few months locked in negotiations with regulators to get the signoff to shed part of its African stake. The bank on Wednesday said it was now targeting holding a 15% stake in Barclays Africa.

The sale offers some reprieve for Mr. Staley, who is being probed by U.K. regulators over his attempts to silence a Barclays's whistleblower. Barclays is expected to announce next month that it will close its "noncore" division, which houses the bank's unwanted assets, a move which the U.S. executive says shows that the turnaround at Barclays is nearly complete.

Mr. Staley decided to shed Barclays's African business in part because regulators make the large bank hold extra capital against the unit. A smaller, less-risky bank wouldn't have to do this. Barclays also estimates that a U.K. tax on bank balance sheets means it would pay an extra GBP200 million in levies by 2021 to keep its African unit on its books.

Once Barclays is a minority owner of Barclays Africa it can deconsolidate the unit from its accounts and get regulatory clearance not to hold capital against it.

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Outside its 12-country Africa unit, Barclays also owned a lender in Egypt, which it sold. It still controls a Zimbabwean bank.

Write to Max Colchester at max.colchester@wsj.com

(END) Dow Jones Newswires

May 31, 2017 12:14 ET (16:14 GMT)