Barclays PLC returns to the South Africa

British bank &to=http:// ' target=_blank>Barclays PLC is returning to the South African lending market after almost 20 years, announcing Monday that it has agreed to buy a majority stake in Absa Group Ltd. for around 33 billion rand (US$5.5 billion; euro4.3 billion).

Barclays, Britain's third largest bank, raised its offer price for 60 percent of the Johannesburg-based bank from 79 pence (US$1.49; euro1.16) to 82.5 pence (US$1.57; euro1.23) per share to secure the deal, which is the biggest single foreign investment in South Africa. Barclays pulled out of the South African consumer market in 1986 amid protests from anti-apartheid groups, but has been keen to return to the country where lending is forecast to grow strongly, reports the Forbes.

&to=http:// ' target=_blank>South Africa has posted 26 consecutive quarters of growth since the end of apartheid in 1994. The banking industry has benefited from interest rate cuts totaling 6.5 percentage points since June 2003, declining taxes and low inflation. Borrowing is forecast to rise 15 percent a year in South Africa.

Absa expects a profit gain of at least 20 percent in the fiscal year ended March 31, 2005. Absa's return on equity, a measure of profitability, was 24.2 percent in the six months to Sept. 30. Barclays had a 2004 return on equity of 19.2 percent.

Gaining access to Absa's 7 million customers in Africa's largest economy would help Barclays expand its credit card, investment banking and asset management business. The takeover will add to earnings and will be financed from available resources and the sale of preference shares, Barclays said today.

Subscribe to Pravda.Ru Telegram channel, Facebook, RSS!

Author`s name Editorial Team