Barclays bank and its subsidiary Absa Group have agreed to combine the majority of Barclays Africa operations with Absa.
The banking giant hopes that the plan will position it as the "go-to bank" on the continent and is expected to bolster plans to expand corporate banking, market activities and bancassurance in Africa.
The combined business is set to create a pan-African financial services business and a platform for further growth. When completed, the JSE-listed business is expected to serve approximately 14.4m customers through a network of more than 1,300 outlets and over 10,400 ATMs.
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The proposed strategic combination, expected to complete in the first half of 2013, will be effected by way of an acquisition by Absa Group of Barclays Africa, the proposed holding company of the portfolio, for a consideration of 129.5m Absa ordinary shares, representing a value of R18,33bn (£1.3bn) for Barclays Africa.
It follows on from steps taken by Absa and Barclays in 2011 to integrate their African businesses from an operational and management point of view. This involved consolidating the regional offices for Absa Africa and Barclays Africa in Johannesburg and establishing a combined Africa management oversight team, as well as introducing a global product strategy across the continent.
Commenting on the rationale for the transaction, Antony Jenkins, Chief Executive Officer of Barclays, said: "This transaction will give us a platform from which we can further grow our Africa business to the benefit of customers, colleagues, shareholders and the communities in which we operate."
Maria Ramos, Chief Executive Officer of Absa Group and Barclays Africa, added: "This is a compelling and unique opportunity for us to further our 'One Bank in Africa' ambitions by combining with a leading sub-Saharan African banking franchise. We are tremendously excited by the opportunities for growth across the continent and the geographically diversified earnings potential that a combined business would deliver."
Barclays share price was up 1.34% to 249.70p at 08:52 on Thursday.
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