British lender Barclays is bullish about its prospects in SA citing increased interest in the country from global clients after the formation of the government of national unity (GNU).
Since the GNU — a collective of 11 political parties — came into effect in mid 2024, a renewed sense of optimism has swept the country. Expectations about the economic growth outlook have also peaked, coupled with reduced uncertainty about electricity supply.
Part of the promise of the GNU was that it would attract, or at least raise, investor interest, given a more certain picture of the political leadership.
According to Amol Prabhu, Barclays CEO for SA and Africa market head, there is rising interest in SA’s investment case.
“In terms of our franchise, we are seeing [that] investors who know emerging markets, and who have invested in Africa and SA particularly, are asking more questions about increased investment, which is positive,” he told Business Day.
“We also have a situation where other emerging market investors, who historically maybe didn’t focus on Africa [and SA ] so much, are now asking more questions about what’s actually happening there? What are the opportunities?”.
Barclays has been operating in Africa for more than a century. Barclays took control of Absa in 2005, but began reducing its shareholding in the SA bank in 2016.
The exit from Africa also included the sale of its other banking units in the region to First Capital.
The UK lender still has an investment banking and private banking presence in SA. According to Prabhu, the region is still important to Barclays.
“SA is quite unique in a way, because it’s very multi sector. You’ve got natural resources, metals, mining, but also healthcare, telcos, FMCG, industrials. There are a variety of sectors which investors can get involved in,” said Prabhu.
“There’s a lot of talk and rhetoric on a political level as it were. But, am I seeing change on the ground, am I seeing investors interested? The answer is simply yes.”
That state of affairs appears to be working in Barclays’ favour.
The bank now focuses its attention on corporates and high net worth individuals looking for international capabilities across private, investment and corporate banking. This puts the bank squarely in competition with Investec, Rand Merchant Bank and the corporate and investment banking arms of Standard Bank, Absa and Nedbank.
Prabhu says Barclays sees these banks more as partners and collaborators than competition.
It makes sense that Barclays is excited about the opportunity. In the first half of 2024, Standard Bank's corporate and investment banking unit — one of the largest players in the region — generated headline earnings of R10.4bn, with a return on equity of 23%.
This sector plays a crucial role in providing advisory services and facilitating financial transactions for corporations, governments and large institutions.
Geographically, its attention is on English-speaking countries in the region, specifically SA, Kenya, Ghana and Nigeria, where the bank has offices.
Prabhu says the Barclays brand, its perceived stability and hundreds of years in business continue to drive business in Africa.
“When I talk to clients here in Africa and SA, and I say, ‘what do you think of Barclays? What comes to mind when you think of the brand?’ There’s the history, but a critical part of that is stability.”
“We’ve been around for three centuries plus, and we’ve seen the challenges that some global bank such as Credit Suisse have faced recently, and … stability is critical to a lot of our clients. And I think the other aspect is independence. We are an independent British global bank.”
He said SA, Kenya, Nigeria and Ghana were all strategic markets for Barclays.
“Why have we focused on those countries? The main reason is around [mainly] brand recognition for many of the individuals we deal with in those countries. They’ve typically spent some time abroad, particularly the UK. Could be [that] they studied there during varsity, they’ve worked there, [or] they lived there in some capacity. I [often] meet clients who say to me they’ve been a client for 60 years. That connection, that almost emotional connection with the brand, is extremely strong.”
“When we look at our clients, particularly in the private banking space, we look intergenerationally. We’re looking at supporting a grandmother, a grandfather, who are often the wealth creators. They could be living in Joburg, they could be living in Plettenberg Bay or Cape Town ... they normally have one child in SA, another in London, and another in Dubai. So they are often global families, and it’s [about] making sure that we can help and support them with their global needs.”
“It could be purchasing the property in London, it could be supporting them with their overseas investment portfolio. Rather than talking products, we talk philosophy.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.