Absa’s Chinese torture as UK parent to slowly drip shares onto the JSE

The financial services sector's worst kept secret was confirmed yesterday when Barclays said it would be offloading its African operations, of which Absa accounts for around 80%. The 62% stake in the JSE-listed Barclays Africa will be sold over two to three years. The news heartened some. Strangely, because it's akin to the slow dripping Chinese torture.

With a known seller wanting to offload hundreds of millions of shares, potential gains for the Barclays Africa stock price are now capped. This overhang will hurt the bank's rating and dis-incentivise executive staff relying on their share options to build capital. It also tells us there was no ready buyer for Absa after three months of Barclays trying to source one.

After the 2015 loss of £394m was disclosed, the Barclays share price fell so fast trading in them was briefly suspended. The stock eventually recovered from being down 11% to off 8% – a market cap loss of £1.2bn – just over £10bn, or 28%, in the first tow months of 2016 and down by virtually half in the past year.

The 2016 loss in shareholder value is three times what Barclays is likely to eventually raise from selling the entire African business. The lauded turnaround specialists, a recently injected chairman and CEO, have thus far hardly covered themselves in glory.