Barclays Bank has finally confirmed the speculations about selling its 62.3% stake in Barclays Africa Group Limited (BAGL).
In its financial report for the full year to December 2015, the bank says the decision to sell down its stake in Africa is “part of the simplification of the group.”
“We have decided, subject to required shareholder and regulatory approval, to reduce our interest in Barclays Africa to a non-controlling, non-consolidated position over the next 2-3 years," said Jes Staley, CEO of Barclays PLC.
In addition to selling its African stake, the group has also cut its dividend to 3 pence per share for 2016 and 2017 from 6.5 pence last year. These strategies are hoped to help the lender boost its capital ratio.
Staley, who took over as CEO for the group in December, said: “These are hard decisions, but we believe that shareholder value in getting non-core closed will significantly exceed any downside of cutting the dividend for two years.” The 52-year-old was speaking in a presentation to analysts on Tuesday. “These strategic actions will bring forward the completion of our restructuring and the emergence of a simpler and very profitable Barclays.”
In an interview with Bloomberg Television, the CEO said that reducing the dividend for 2016 and 2017 was a “very difficult decision to make.” This he said will enable the bank to shed non-core assets with an aim to get back to paying out “significant” percentage of profits in a dividend in 2018.
Barclays has been in Africa for almost a century operating in 12 countries and employing 45,000 people in over 1,260 branches.
Accordingly, the Bank has also unveiled a new structure which has seen a reduction of its business to two divisions- Barclays UK and Barclays Corporate and International.
“Barclays Corporate & International is a diversified transatlantic business comprising our corporate banking franchise, which is market leading in the UK with strong international growth opportunities, our top-tier investment bank, a strong and growing US and international cards business, our international wealth offering, and leading payments capability through both corporate banking and the Barclaycard merchant acquiring expertise,” an excerpt from the latest report reads.
The statement said: “Changes resulting from this work will have a material impact in the way the group operates in the future through increased cost and complexity associated with changes required by ring fencing laws and regulations.”
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