Barclays has ended its 105-year presence in Zimbabwe by agreeing to sell its operations in the cash-starved African country to First Merchant Bank, a Malawi-listed lender. The disposal, which is expected to be announced as early as Friday morning, is being contested by Barclays staff in Zimbabwe, who have appealed to the country’s high court to block the transaction.
The board and management of Barclays’ Zimbabwean operations is fighting the legal claim, saying it is without merit, according to a person briefed on the matter. First Merchant Bank already has stakes in Capital Bank in Mozambique and Botswana and First Capital Bank in Zambia. But this is its first investment in Zimbabwe. The agreement comes only a day after Barclays said it had cut its stake in its main African operation from 50 per cent to 15 per cent, selling control of the Johannesburg-listed business, which has always remained separate from the UK bank’s Zimbabwe business.
The deal must be approved by local regulators. Rasik Kantaria, a non-executive director of First Merchant Bank, was also a director and large shareholder of Crane Bank in Uganda, which collapsed last year amid allegations of irregular lending practices. Barclays first established a presence in Zimbabwe when it was still a British colony in 1912. It is selling its two-thirds stake in Barclays Bank of Zimbabwe, which is listed in its home country with a market capitalisation of $73m. The deal means Standard Chartered is the only western bank left in Zimbabwe, which is grappling with a severe dollar shortage and political uncertainty over Robert Mugabe, the 93-year-old president, ahead of next year’s election. Barclays Bank of Zimbabwe, which has $476m of total assets and made $10.9m of net profit last year, is a similar size to First Merchant Bank, which has $450m in assets and made $10m of profit last year.
Barclays will transfer all of the bank’s 700 employees, 25 retail branches and five corporate service centres in Zimbabwe to First Merchant Bank. The UK bank will reduce its risk-weighted assets by £292m. The sale follows a strategic decision to dispose of most of Barclays’ sprawling African operations by Jes Staley after he took over as chief executive 18 months ago. He was seeking to raise capital and refocus on its main US and UK markets. The bank said on Thursday that the reduction of its stake in its main South African-listed business to just below 15 per cent would add 73 basis points to its common equity tier one ratio, a key benchmark of banking strength, taking it to 13.2 per cent. That has prompted analysts to forecast that Barclays will use its excess capital to rebuild its dividend, which was cut in half by Mr Staley, or buy back expensive debt. Last year, Barclays agreed to sell its separate operations in Egypt to Attijariwafa Bank, the biggest bank in Morocco by revenue, in a $500m deal.