Barclays Heads Out of Africa -- Update

By Max Colchester and Ian Walker Features Dow Jones Newswires

Barclays PLC said Thursday it completed the planned sell-down of its African business, reducing its stake in the unit to 15%.

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The U.K. bank said it raised GBP2.22 billion ($2.85 billion) from the sale of Barclays Africa Group Ltd. shares after it shed more of its stake than initially expected due to strong investor demand.

In 2016, Barclays Chief Executive Jes Staley pledged to end the bank's century-long presence in Africa to drum up funds that could be redeployed to other parts of its business. It spent the past few months locked in negotiations with regulators to get the signoff to exit from the African business.

The sale should help alleviate capital fears around Barclays, which still needs to pay GBP800 million to split the African business out of its franchise. The deal will add 27 basis points to Barclays's capital ratio, a key measure of balance sheet strength, which at stood at 12.5% in March 2017.

Mr. Staley decided to shed Barclays' 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.

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.

Barclays is expected to announce at the end of this 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.

The overnight sale of saw Barclays cuts its stake in Barclays Africa from 50.1% to 15%. The bank intends to hold on to the remaining shares in the unit.

Write to Max Colchester at max.colchester@wsj.com and Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

June 01, 2017 04:34 ET (08:34 GMT)