Barclays moves to calm depositors ahead of major statement today

Barclays Bank of Kenya is fighting to prevent a possible bank run after it emerged that its parent company is considering selling its stake in Africa.

The Financial Times reported last week that Barclays would announce the sale of its shares in Barclays Africa Group Limited (BAGL), which is the Johannesburg-listed firm that manages the lender’s African units.

The news caused a panic in the market, and saw Barclays Bank of Kenya take to social media to assure its customers that their accounts were safe.

Shareholder changes

A bank run occurs when a large number of bank customers panic and rush to withdraw their deposits simultaneously due to concerns mostly driven by fears of collapse.

“It is factually incorrect that Barclays Bank of Kenya Ltd (BBK) is shutting down in Kenya. We have a clear strategy of our Kenya business and there are no plans at a local, regional or group level to shut it down,” the firm’s managing director, Jeremy Awori, said in a statement yesterday.

“Your accounts are and continue to be safe and are not impacted in any way. The speculation concerns shareholding of Barclays Africa Group Ltd and does not impact the day-to-day running of BBK.”

But the bank’s shareholders and about 800,000 customers will know the fate of the African operations today when Barclays Plc announces its full-year financial results.

The bank, which recently celebrated 100 years of existence in Africa, asked its customers not be concerned about possible shareholder changes, and assured them their deposits are safe and the operation of their accounts will not be impacted.

“BBK is a significant player in the Kenyan banking industry and is well capitalised and liquid,” Mr Awori said.

But should the UK lender decide to go ahead with its planned divestiture, it would mark the end of a storied era for the bank.

Barclays Bank of Kenya has been struggling to hold on to its position among the country’s top five lenders by profitability and market capitalisation due to a host of factors, among them, a slow pace of adoption to market changes.

A 2013 reorganisation of Barclays’ business in Africa was expected to boost regional branches’ ability to make decisions and respond to unique challenges on the continent.

The reorganisation saw 12 banks across Africa brought together. But it appears the strategy is yet to pay off given the new plans to once again restructure the African business.

Barclays Plc said it is evaluating its strategic options in relation to its shareholding in BAGL, where it has a 62.3 per cent stake. It expects to update the market at the time of its 2015 full-year results announcement today.

The Financial Times, which cited people familiar with the matter, reported the group no longer sees Barclays Africa as core to its strategy, and plans to focus on UK and US markets.

The Wall Street Journal had earlier reported that Barclays plans to sell its assets in Africa, which include Absa. Absa, the paper said, has struggled in recent years, with South Africa’s weaker currency and struggling economy also points of concern.

“Barclays does not own all of the equity, but it owns 100 per cent of the risk if something goes wrong,” the Financial Times cited a source as saying.

Barclays’ stake is worth R78 billion (Sh493.1 billion) at current market prices. Investment bankers say there are no obvious strategic buyers at this stage.

The Financial Times, which cited people familiar with the matter, reported the group no longer sees Barclays Africa as core to its strategy, and plans to focus on UK and US markets.

The Wall Street Journal had earlier reported that Barclays plans to sell its assets in Africa, which include Absa. Absa, the paper said, has struggled in recent years, with South Africa’s weaker currency and struggling economy also points of concern.

“Barclays does not own all of the equity, but it owns 100 per cent of the risk if something goes wrong,” the Financial Times cited a source as saying.

Barclays’ stake is worth R78 billion (Sh493.1 billion) at current market prices. Investment bankers say there are no obvious strategic buyers at this stage.