Barclays forced by Zuma’s political crisis to slash stake in South African unit

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That’s not cheering news for South African economy, as Barclay, a notable British bank , and forerunner of Union Bank Nigeria, UBN, said Thursday it has further reduced its stake in its South African operations as part of a global strategic re-think unveiled last year. This is even as another South African cash cow, MTN is embroiled in S4.2 billion lawsuit filed by a Turkish telecom company Turkcell against unfair practices by MTN.  This is coming against the backdrop of roiling political cum economic crisis caused by President Jacob Zuma’s firing of his influential Finance Minister, Trevor Manuel.

Barclays said in a statement that it had placed a stake of 33.7 percent in Barclays Africa with institutional investors, raising some £2.224 billion (2.5 billion euros, $2.9 billion).

Barclays, which has decided to focus on its two core markets of Britain and the United States, now holds a stake of just 16.4 percent in the unit.

It does not want to pull out completely, however, and will hold on to a stake of 15 percent, it said.

Barclays Africa, which is listed on the Johannesburg stock exchange and is present in around 10 countries, has declined in value in recent months, against the backdrop of the political crisis in South Africa.

The British bank was compelled to make a write down of around £900 million on the unit in its first-quarter accounts.

Meanwhile, Bloomberg reported that South Africa avoided a second downgrade in two months from Fitch Ratings “as the company left its assessment of the nation’s debt at the highest non-investment grade.”

 

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