Barclays (BCS) To Offload Zimbabwe Unit To FMB Capital

As part of the efforts to exit Africa, Barclays (LON:BARC) PLC (NYSE:BCS) announced the divestiture of its 67% stake in Barclays Bank of Zimbabwe Limited (BBZ) to Malawi-based FMB Capital Holdings PLC. The company had placed the Zimbabwe unit along with its other African operations (Barclays Africa and Egypt unit) under its Non-Core division last year.

Notably, the financial terms of the transaction were not disclosed. The deal, subject to regulatory approvals, is anticipated to close in third-quarter 2017.

Nonetheless, the transaction is already facing problems. The deal is being contested by BBZ’s staff, who appealed to block it in Zimbabwe’s high court. Apart from this, it is caught in a political storm as the sale flouts the country's indigenisation laws.

Following the closure, BBZ’s 700 employees along with 25 retail branches and five corporate centers will form part of FMB Capital. BBZ had total assets worth $476 million and recorded net profit of roughly $11 million in 2016.

This is FMB Capital’s first investment in Zimbabwe. The firm already has stakes in companies based in Mozambique, Zambia and Botswana. For Barclays, the deal will result in lowering of £292 million ($375.7 million) worth of risk-weighted assets.

Barclays is on track to wind down its Non-Core division by mid-2017, driven by continued divestiture of non-core operations world-wide. In May 2017, the company sold 33.7% of its stake in Barclays Africa Group Limited (BAGL), while last year it divested 12% stake in the unit. These lowered the company’s stake in BAGL to almost 16.4%.

Also, Barclays sold its Retail and Corporate Banking business in Egypt to Attijariwafa Bank S.A. Apart from these, the bank sold several operations across the globe, thereby simplifying its business and improving efficiency.

Driven by these efforts, investors seem to be bullish on the stock. Barclays’ shares increased 19.2% over the last one year, significantly outperforming the gain of 3.6% for the Zacks categorized Foreign Banks industry.



Currently, Barclays carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy)stocks here.

Several other major global banks including HSBC Holdings (LON:HSBA) plc (NYSE:HSBC) , Deutsche Bank AG (NYSE:DB) , Credit Suisse (SIX:CSGN) Group AG and UBS Group AG (NYSE:UBS) have been also restructuring and simplifying operations to improve efficiency and increase profitability.

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