Absa deal makes Barclays Africa's largest lender

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The Independent Online

Barclays aims to become Africa's "pre-eminent bank" after sealing a R33bn (£2.9bn) deal to take control of Absa, South Africa's biggest consumer bank. The acquisition could herald the influx of more foreign investment into the country.

Barclays aims to become Africa's "pre-eminent bank" after sealing a R33bn (£2.9bn) deal to take control of Absa, South Africa's biggest consumer bank. The acquisition could herald the influx of more foreign investment into the country.

Britain's third-largest bank said yesterday it had received written approval from 63 per cent of Absa's shareholders for its plans to acquire a 60 per cent stake in Absa. Naguib Kheraj, Barclays' finance director, said: "We want to create the pre-eminent African bank. The outlook for South African banking is excellent."

Barclays said it would integrate its operations in 10 African countries with Absa's businesses. Measured by the number of customers, the tie-up will make Barclays Africa's biggest lender, putting it ahead of the London-listed emerging markets bank Standard Chartered.

Steve Booysen, who will stay on as Absa's chief executive, said: "We want to become the pan-African powerhouse and we want to be the number one on the Continent. Our aspiration is to achieve this leadership position in five years' time."

South Africa's finance minister Trevor Manuel has given the go-ahead for the acquisition, despite initially harbouring some reservations as the country's policy had been to keep the four largest banks in domestic hands. The deal marks the biggest single foreign investment in South Africa, and Barclays' return to retail banking after protests about its dealings with the apartheid regime forced it to pull out of the country in 1986. Since then, it has returned with a corporate banking operation.

Mr Manuel said yesterday the potential benefits of the tie-up outweighed any potential risks or disadvantages. A finance ministry statement said the deal was a "vote of confidence in the country's significant political, economic and social progress over the past decade".

Analysts said the deal could open the floodgates of investment in South Africa. Mr Manuel said on Sunday he would consider other bids for major domestic banks, on their own merits, on a case-by-case basis. Standard Chartered, which was also in the running for Absa, said it would focus on expanding its African businesses organically, although it would keep its eyes open for any potential acquisitions. Citigroup is another likely contender.

Barclays had to increase its offer to R82.50 a share plus a R2.00 dividend, from R79 plus a dividend, to persuade some smaller shareholders to back the deal. But Mr Kheraj strongly rejected suggestions that Barclays was paying too much. "We are not feeling like we are overpaying here. This is a very good deal."

The offer was structured as a scheme of arrangement to win over reluctant investors. Some were concerned that they would be disadvantaged if other shareholders did not tender their stock, and were therefore able to reap all the benefits if the shares continued to rise as expected. Under the terms, investors will be required to sell at least 32 per cent of their stock but can offer more voluntarily.

The deal came under attack from the civil rights group Jubilee South Africa, which claims Barclays should apologise for its involvement in South Africa during apartheid. Mr Kheraj said: "We have nothing to apologise for. When Barclays was here, we were seen as a force for the good."

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