After A Century, Barclays Steps Back From Africa Operations

For Barclays, the British bank, it’s stiff upper lip time.

Shares in the financial powerhouse were down as much as 11 percent on the day in the wake of new strategy initiatives that include a revamped strategy to focus on its U.K.-based consumer bank and also the corporate investment bank at the expense of, most notably, the company’s presence in Africa, where it intends to cut its presence.

Oh, and the company is also cutting its dividend – something no one on Wall Street likes to see.

The Tuesday news takes place as the company brings a new leader, James E. Staley, on board. Staley took the reins as CEO at the end of last year.

And while some of these strategy revamps have been telegraphed, the numbers show some impact from regulations and investigations, as the firm posted a net loss of roughly $547 million (394 million pounds), which is far worse than a year ago at 174 million pounds.

The decision to pare back operations in Africa — where the company will sell off much of its 62 percent ownership in publicly traded Barclays Africa — represents what The New York Times said was a step back from one of the key pillars of Barclays’ long-term strategy, right in lockstep with credit cards and investment banking. With the selldown of the Africa business – in a business that serves a region where the company has been for more than a century – minority ownership will effectively take the business off of Barclays’ books.

Management stated on the conference call that it had become increasingly difficult to operate within the region, with a slew of financial impacts extending from the region’s capital and regulatory requirements and bank levies (a form of tax).

And there could be some legal issues afoot, too. The Times noted that in its annual report, Barclays said that Absa Bank, which is a unit of the Africa Group, had pinpointed “potentially fraudulent activity” by some of its own customers, who utilized “import advance payments” in currency transfers that went from South Africa to separate accounts globally, including Asia and the United States.

The news to cut the operations in Africa comes just weeks after other business exits became apparent for Barclays, including the decision to exit some operations in Asia and cut more than 1,200 positions at investment banking operations. That comes after a May 2014 announcement that roughly 19,000 positions would be eliminated firm-wide through the end of 2016. Other exits in the works include walking away from the Zimbabwe and Egypt operations, reported The Times.