April 11 (Bloomberg) -- Maria Ramos, chief executive officer of Absa Group Ltd., the South African bank buying most of Barclays Plc’s African assets, expects to complete the deal by September after regulatory delays.
Kenya, Botswana, Ghana and Mauritius still need to approve the transaction, she said yesterday in an interview.
“We’re still hoping that the deal will conclude in the first half of the year, but it’s a stretch,” Ramos said in Johannesburg. “We’re still confident we will conclude in the timelines allowed by the sales and purchase agreement, which is 90 days after June 6.”
Barclays and Absa said on April 5 that the deal, which involves the South African bank offering 18.3 billion rand ($2.06 billion) in shares for the bulk of Barclays’ African operations, was delayed, without specifying a time frame. The British bank, which first bought an Absa stake in 2005, will see its holding increase to 62.3 percent from 55.5 percent with Absa initially scheduled to change its name to Barclays Africa Group Ltd. on Johannesburg’s stock exchange by April 15.
“I was always aware that taking on eight countries wasn’t going to be a walk in the park,” she said.
Right to Terminate
“While they have at least given themselves more realistic deadlines now, as we have seen with many recent bank deals in Africa, one cannot take regulatory approvals for granted,” said Neville Chester who helps oversee the equivalent of $42 billion at Coronation Fund Managers Ltd. in Cape Town including Absa stock. “Post the global financial crisis, there is an even greater focus on who owns banks and how they are regulated in each country.”
According to a circular dated Dec. 14, both banks had the right to extend the transaction’s completion date by 90 days. The document also says if any of Barclays’s assets in Seychelles, Tanzania, Uganda and Zambia are not transferred by the time the deal is ready to conclude, they may still be moved at a later date. If the deadlines set are not met, both banks also have the right to terminate the agreement, according to the circular.
South Africa’s banking regulator has approved the Barclays, Absa transaction after having initially opposed the transfer of assets when it was first mooted eight years ago. The risks associated with having a South African bank owned by an international lender have not increased since 2005, Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town, said.
“At least these assets are being bought in the trough post a major crisis,” Rassou said.
Barclays has surged 23 percent since the transaction was announced and is the second best-performing stock on the six-member FTSE 350 Banks Index this year. Absa, which has fallen the most of South Africa’s four largest banks this year, closed 0.3 percent higher at 157 rand in Johannesburg trading while Barclays gained 1.9 percent to 303.9 pence in London.
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