One of the smarter decisions taken when we created Biznews was securing a licensing agreement to republish content from the Financial Times of London. The FT is one of the most influential business newspapers/websites on earth, employing over 600 journalists with a wide contact base. When the FT publishes something, you can be assured the information is accurate.
Yesterday, courtesy of the FT, we were able to report that UK bank Barclays is suddenly keen to sell its 62% controlling stake in South Africa’s biggest retail bank, Absa. Barclays has a new chairman, a new CEO and a desperate desire to restructure. But even so, until a year ago Absa was regarded as a priceless jewel in the Barclays crown.
But with the Rand on a slippery slide, when judged in the currency that matters to Barclays (Sterling) Absa now produces a return on equity well below the group’s requirements. With further rand weakness likely as an unrepentant ANC closes ranks behind an economically ignorant President Jacob Zuma, Absa is now very much on the block.
Zuma’s apologists will claim the Barclays restructuring was happening anyway. They may even paint this as an isolated foreign divestment driven by unique circumstances. That’s avoiding the obvious. For one thing, it is the first rather than the last big foreign sale. For another, in banking, investors always “buy” the country first before acquiring shares in any of the banks based there. The looming Barclays sale of Absa is a clear message. While the ANC remains in its current denialist frame, it’s unlikely to resonate.
