Groups in talks over merger of Barclays Tanzania, NBC

NBC HQ which was formerly Barclays Bank HQ in Tanzania
The National Bank of Commerce (NBC) and Barclays Tanzania could soon become one entity by next year if talks between Barclays group and Absa become successful.

The two groups are in talks to combine their African units and complete a plan started seven years ago in a move aimed at accelerating expansion on the continent to catch up with rivals.

There’s no certainty the talks will lead to any deal, which wouldn’t be completed until 2013, the banks said in a statement.  

But if successful the deal could help to reduce operations costs of NBC and Barclays bank, which are currently struggling with inefficiency. Both banks registered losses, after tax, in the second quarter of this year.

Other countries where the operations of the two banks could be joined together are Botswana, Ghana, Kenya, Uganda and Zambia.

Barclays acquired a majority stake in South Africa's third-largest bank in 2005 but the two have remained separate entities outside South Africa.

This has forced them to run parallel operations in Tanzania. “These are well-run, profitable operations with little overlap with Absa except for Tanzania,” said Patrice Rassou, an Absa investor who helps oversee about $41 billion as head of equities at Sanlam Investment Management in Cape Town.

Analysts have said Absa, which is 56 per cent owned by Barclays, has been slow to take advantage of its parent's wide presence on the continent, trailing fast-moving rival Standard Bank Absa shelved plans to buy Barclays' African assets in 2008 citing price differences.

The planned purchase had been part of the original deal when Barclays acquired its Absa stake. Barclays revived the plan in April 2011, aiming to consolidate operations at Absa headquarters in Johannesburg and move other work to Dubai.

Barclays and Absa had already agreed to work more closely together in their "One Africa" strategy and had set up a joint team of executives. The proposed combination of the businesses will mirror the operational structure already in place, said Maria Ramos, chief executive of Absa and Barclays Africa.

"It will provide a platform for further growth," she said.

The two lenders are hoping to grow their retail and corporate franchise across the continent, while growing the investment bank. They have launched financial services in Botswana, Mozambique and Zambia, and are planning to roll out similar products in Kenya.

Robert Diamond, who resigned as Barclays chief executive officer last month after the lender was fined for manipulating global interest rates, sought to boost the British bank’s profit by combining Absa and Barclays’s products and customer bases across more than 10 African countries. Together the banks have almost 60,000 staff on the continent.

The South African bank’s shareholders will get “a single entry point into Africa” from a deal, “giving shareholders in both businesses the benefit of African growth,” CEO Maria Ramos said in a telephone interview from Johannesburg today. It’s not clear how the ownership structure will work or whether Barclays will take a larger stake in Absa, as “there’s lots of work to be done and it’s very early days,” Ramos said.

The announcement of the potential combination has “nothing to do with Bob leaving last month” and the operational integration has been underway for more than a year, Ramos said, referring to Diamond. Barclays’s listed subsidiaries in Kenya and Botswana will be maintained, according to the UK bank. Kenya is Barclays’ largest African unit, Ramos said.

Barclays’s pretax profit from Africa, including the bank’s holding in Absa, rose 13 percent to 910 million pounds ($1.4 billion) in 2011. The unit contributed 15 per cent of the bank’s 5.97 billion-pound pretax profit. Together, Barclays and Absa operate in 12 countries and have over 14 million customers, according to Absa’s annual report.
Source, the Citizen and Agencies,
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