Barclays Joins UBS in Pursuit of African Millionaires
Barclays Plc (BARC) is joining Citigroup Inc. (C) and UBS AG (UBSN) in targeting millionaire clients in Africa as the continent’s fastest-growing economies swell a rich list topped by billionaires Aliko Dangote and Johann Rupert.
Barclays Africa Group Ltd., in which the London-based bank will hold a 62.3 percent stake, is seeking to build on experience managing wealth in South Africa after acquiring eight African operations previously run by its parent. That expansion depends on regulators in countries including Kenya, Ghana and Mauritius, said Chief Executive Officer Maria Ramos.
“It’s potentially a very exciting opportunity,” Ramos said in an interview in Johannesburg on July 30.
The number of Africans with at least $1 million of investable assets climbed 9.9 percent to 140,000 in 2012, according to a report published on June 18 by Cap Gemini SA (CAP) and Royal Bank of Canada. That was the fastest rate of increase outside North America as the economies of countries such as Nigeria and Ghana grew at more than 5 percent last year.
“It’s a great time for private banking, wealth management and asset management in Africa,” Mark Mobius, who oversees $53 billion as executive chairman of Templeton Emerging Markets Group, said in an interview on June 28.
About 42 percent of the millionaires in Africa and the Middle East are prioritizing wealth accumulation, a higher proportion than in North America, Europe or Asia, the Cap Gemini report showed.
UBS, the world’s biggest wealth manager, said in May it will expand its operations in Africa as economic growth rates boost demand. The industries contributing most to wealth creation on the continent include the resources, telecommunications and consumer industries, according to the Zurich-based bank.
Africa’s increasing wealth presents an opportunity, said Donna Oosthuyse, the head of Citigroup in South Africa.
“In our private bank we have officers who are dedicated to Africa and in our international personal bank,” she said on July 25. “Just as we see international global companies needing international capabilities, so do individuals.”
Dangote, Africa’s richest man, is benefiting from the continent’s economic growth, adding $6.7 billion to his wealth this year, according to the Bloomberg Billionaires Index. That lifted the Nigerian, who owns the continent’s biggest cement producer, to 31st on a global rich list with an estimated net worth of $21.3 billion, eclipsing the $18 billion of Facebook’s Mark Zuckerberg.
Economic growth in sub-Saharan Africa is projected to accelerate to 5.9 percent in 2014 from 5.1 percent this year, the Washington-based International Monetary Fund said on July 9.
“The growth means pools of savings are being created across the continent in counties like Nigeria, Kenya and Ghana,” said Thabo Khojane, managing director of Investec Asset Management in Cape Town. “I don’t think Africa’s problems are solved, but the trend is undoubtedly in the right direction. I’m an African bull.”
Local and international wealth managers are catching on to that potential as they seek to bolster earnings that are being squeezed by tougher regulatory requirements, said Patrice Rassou, head of research at Sanlam Investment Management in Cape Town.
“South African banks and global banks have been bad in general in the wealth management market,” Rassou said in an interview. “The one who could be a game changer is Barclays Africa -- it has the product set. The demand is there.”
The merger of Barclays’s assets with what was Absa Group Ltd. (ASA) in South Africa gives Barclays Africa 1,200 branches across the continent, 45,000 staff, more than 10,000 ATMs and increased access to the continent’s estimated 128 million consumer households, Ramos said in a presentation in Johannesburg today. Using Barclays’s technology instead of developing new systems means products, including those for wealth management, can be rolled out “at low cost,” she said.
Barclays Africa will look at developing a presence in Nigeria, the region’s second-biggest economy, Chief Financial Officer David Hodnett said in an interview on July 30. The IMF is forecasting economic growth of 7.2 percent in Nigeria this year.
Barclays Africa, on its first day of trading under its new name in Johannesburg, closed 1 percent higher at 142.45 rand. In London, Barclays dropped 2 percent to 285.25 pence by 4:18 p.m., paring this year’s gain to 8.7 percent.
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