Barclays has come under attack from a long-term shareholder for deciding to sell its African business and rebuild its investment bank.
Django Davidson, a partner at Hosking Partners, a London-based fund manager, writes in The Times today that his firm is “somewhat confused and decidedly frustrated” by strategic initiatives being pushed through by Jes Staley, the bank’s chief executive.
“The latest strategy update sees the painful, stop-start transformation from highly profitable retail caterpillar to swashbuckling, capital-destroying investment banking butterfly almost complete,” Mr Davidson writes.
Instead of sticking with Africa, Barclays said this month that it would shrink its presence there to focus on other areas, including its investment banking in London and New York.
The plan has similarities with the 1980s, when Barclays sold its South African business after protests about its presence in a country under apartheid rule, and created an international investment bank. The deal was terrible for shareholders, Mr Davidson writes.
Mr Staley took over the top job on 1st December and is still getting to know Barclays major investors.
Shares in the bank fell 8 per cent three weeks ago when he announced plans to cut the dividend in half for two years and said Barclays would get out of part or all of its African business within two to three years.
The measures were designed to accelerate the reshaping of the bank so that it could focus on growth.
“We are acutely aware of our shareholders being tired of the time it has taken to restructure Barclays. We need to bring the restructuring to an end,” Mr Staley said.
Despite owning only 62.3 per cent of the Johannesburg-listed Absa, global regulators count the division as completely owned by Barclays, so the bank levy and international buffers are based on the whole African business.
“We’re taking 100 per cent of the liabilities while taking only 62 per cent of the earnings. That makes it structurally invalid,” Mr Staley said.
Barclays has left the door open to keeping a minority stake.
Source: The Times
