With operations in 10 countries across Africa, Barclays has one of the broadest franchises on the continent of any international bank and, according to Antony Jenkins, CEO of Barclays Retail, it is a business unit of growing strategic importance for the group. “In my view, Africa is a jewel in the Barclays crown that we’ve probably paid less attention to than we should have done in the past,” he says, speaking from the bank’s global headquarters in London’s Canary Wharf.
Barclays underwent a reorganisation in November 2009, which saw it segmented along functional lines, separating the corporate and investment banking and wealth-management divisions from the retail side. This latter division, under Mr Jenkins, incorporates the UK retail operations – with 11 million current accounts and £4bn ($6.3bn) in income – the Barclaycard business, western European retail operations and, finally, Africa. The African operations themselves are not split along similar lines, with each national business instead incorporating the broader spectrum of retail and corporate functions.
Barclays’ CEO in waiting, Barclays Capital chief Bob Diamond, whose appointment has caused political hand-wringing in the UK due to his involvement – and success – in the style of investment banking that policymakers say led to the financial crisis, has said that sub-Saharan Africa is a “huge opportunity” for the group.
Despite Mr Diamond’s reputation for short-termism and the labels thrown at him such as 'casino banker', Mr Jenkins is under no illusion that Africa merely represents a short-term, speculative opportunity. “You have to be prepared to take a long-term view on Africa. If you seek to look at it as a short-term profit-maximising opportunity, then I don’t think you’ll be successful,” he says.
Demographic trends, an emerging middle class, increasing regional trade and foreign direct investment, both from traditional trade partners and from new investors, notably China and India, provide significant opportunities for long-term growth in Africa. With a stated desire to be a top-tier performer in all of its markets, Barclays may look to build its network through acquisition, although Mr Jenkins says that he does not feel under pressure to move quickly. “We don’t feel under the gun to make an acquisition, but from time to time we’ll look at things and, if they make sense, we’ll go for them,” he says.
The natural place for such an acquisition would seem to be Nigeria – anglophone, the continent’s most populous country and the second largest economy south of the Sahara. The country’s banking system has undergone significant reform, and several banks are now up for sale by the government, having been bailed out in August 2009. The government has expressed a preference for an international player to enter the market through one of these institutions, and local banks have been reticent to buy into their former competitors.
“We’re looking at Nigeria in partnership with Absa [a South African bank], and we’ll decide which brand we want to go into the market with and which way we want to go in,” says Mr Jenkins. “We don’t intend to do anything capricious, but [Nigeria] is the obvious place where we would like to have a presence over time, because we do have presences in the other three big [African] markets: Egypt, Kenya and South Africa. That would kind of round out the set.”
Combined, the 10 markets that Barclays Africa operates in should grow about 8% this year, says Mr Jenkins, a growth rate that is attractive in comparison with developed markets, which are still pulling themselves out of recession. To capture this growth, the bank will initially focus on building its franchises with large local and multinational businesses before moving onto products aimed at affluent individuals and eventually the mass market.
Mr Jenkins says: “We believe that, in retail banking, moving our intellectual capital around the globe is a competitive advantage for us. A lot of the ways in which you manage retail businesses is quite similar, regardless of the market; the market evolution state may be different, but the essence of how you run a retail bank is quite similar. It’s a slightly different way of doing it in Kenya from in Enfield [in the UK], but the principle’s the same.”