Photographer: Simon Dawson/Bloomberg

Bob Diamond Sees Brexit's Impact More Profound Than Expected

  • London may lose legal staff; NYC to benefit: ex-Barclays boss
  • Diamond sees Atlas Mara present in 10-plus African countries

Bob Diamond, the architect of Barclays Plc’s investment bank over more than a decade in London, said the British capital will be hurt more than people expect from Brexit, with lawyers likely to join bankers in moving away.

“People are beginning to understand Brexit is going to be far more profound and long-lasting than they thought,” Diamond said in a phone interview Thursday from New York. “I’d be very surprised if support services and legal services don’t move.”

Bob Diamond

Photographer: Patrick T. Fallon/Bloomberg

Diamond, who now chairs African bank investor Atlas Mara Ltd., said he expects New York will benefit at London’s expense. Britain’s decision to leave the European Union has global banks establishing new bases within the trading bloc to ensure continued access to clients in the region. Some observers have said that given fragmentation between European trading centers, certain activities are more likely to gravitate to the bigger bulk of the U.S. financial capital.

Diamond’s comments contrast with a more upbeat take on Brexit from one of his successors as chief executive officer of Barclays. Jes Staley, an American who has run the bank since the end of 2015, has been adamant that London will remain a financial hub, and has championed the city’s financial-technology scene as a source of jobs that will offset those leaving town. Still, he has picked Dublin for Barclays’s post-Brexit expanded EU base.

African Growth

Britain is due to leave the bloc in March 2019. Brexit talks have plodded forward over the summer, with the EU’s lead negotiator highlighting the depth of the division between the two sides this week. Goldman Sachs Group Inc. said on Thursday that it could increase its Frankfurt staffing as much as fourfold after Brexit, while Morgan Stanley, Citigroup Inc. and UBS Group AG are also all relocating jobs to Germany’s financial capital.

As for Atlas Mara, which trades in London, Diamond said his firm will benefit as global banks lower their exposure to emerging markets because of capital controls and regulation. Atlas Mara’s opportunities to boost market share have never been better, he said, and it plans to have a presence in 10 or more African countries in the next three to five years, up from the current seven. It also has a treasury and markets unit based in Dubai.

Earlier, Atlas Mara reported that first-half net income to June rose to a record $11.5 million from $1.2 million a year earlier. Its share price has rebounded 36 percent in 2017 after sliding 82 percent between its initial public offering in 2013 and the end of last year, as commodity prices and local currencies slumped. Its biggest investment is a stake in Union Bank of Nigeria Plc.

“We’ve delivered what we promised,” Diamond said, adding that Atlas Mara is on track to more than double 2016’s full-year profit, which was $8.4 million.

With cost cutting and a reduction in headcount, Atlas Mara says it will save about $20 million this year. Next year, it wants to take a controlling stake in UBN and have that bank expand by potentially buying another Nigerian lender.

“A core part of growing the balance sheet are the opportunities for UBN to make acquisitions,” Kenroy Dowers, Atlas Mara’s group managing director for strategy and investments, said on the same call. “We’re not indicating there’s a specific target in mind. But we do believe Nigeria is key to our strategy and we clearly want to increase our position there.”

Dubai’s Contribution

Atlas Mara’s treasury and markets business in the United Arab Emirates is another focus area with the group expecting the Dubai Financial Services Authority to authorize its operations before year end. Total revenue from this unit amounted to $27.5 million in the first half, which equates to 23 percent of the group’s total income.

The markets and treasury operations are a mix of bond business, including sovereign bonds, and currency services such as hedging, Diamond said. There’s no proprietary trading and with other banks retreating from emerging markets, there’s “lots more to go” for this business, he said.

Having completed the sale of a 42 percent stake in Atlas Mara to Fairfax Africa last month, Diamond now has the capital to pursue his African and Middle Eastern ambitions. The board of Atlas Mara will change as Fairfax Africa assigns four directors and further announcements on that will be made by October, Diamond said. With cash in the bank and new partners on board, “we’ll aspire to be as fabulous as we can be,” he said.

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