04 March 2016, 18:45 / Finance

Ex-Barclays CEO wants to buy bank assets in Africa

Once upon a time, Bob Diamond, who left the bank in scandal in 2012, himself developed its business on the continent Martin Arnold

After leaving Barclays in 2012 due to the LIBOR rate manipulation scandal, Bob Diamond now wants to buy the bank's business in Africa / Lefteris Pitarakis / AP

Bob Diamond, the former chief executive of Barclays, is seeking investors to buy part of the bank's Africa business, which he helped build. Earlier this week, Barclays announced plans to sell its nearly 100-year-old African division. Its new chief executive, Jes Staley, wants to focus on two key markets - the UK and the US.

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It would be a landmark deal. Diamond was forced to leave Barclays in 2012 due to the LIBOR rate manipulation scandal. He then created a holding company, Atlas Mara, to invest in African banks. Barclays now intends to gradually sell its stake (62.3%) in Barclays Africa Group, located in South Africa, over the course of two to three years. Under Diamond's leadership, the British bank and Absa, one of South Africa's largest banks, merged their operations in South Africa and 11 other countries on the continent five years ago.

Diamond is now betting that Barclays will decide to sell its African assets outside of South Africa first. He has already held preliminary talks with major investors in hopes of raising hundreds of millions of dollars to buy the operations, people familiar with the matter said. According to them, Diamond's most likely partners could be sovereign wealth funds from the Middle East and Asia, sources say.

However, Atlas Mara will struggle to raise enough funds. Its market capitalization is about 230 million pounds ($324 million), far less than the value of Barclays' African business outside South Africa, which could be valued at $2.1 billion. “This is the opportunity of a lifetime for him,” says a person close to Diamond. “I think it’s a very difficult deal, but if anyone can pull it off, it’s Bob.”

There are other possible buyers for Barclays' African assets. Among them are the Chinese bank ICBC, which has a large stake in the South African Standard Bank, and the French Societe Generale, which operates in 18 countries on the continent. There are also several potential bidders for the British bank's entire stake in Barclays Africa, rivals say. But regulators are expected to prevent its sale to local rivals such as FirstRand or Nedbank. So Barclays may have to sell its stake piecemeal to institutional investors.

The alternative is for Barclays to sell banking assets in 11 other countries before reducing its stake in Barclays Africa. Approximately 80% of the latter's profits come from operations in South Africa. But Barclays Africa's independent board of directors may not approve. “I think dividing the business could be a solution,” says one banker. “But from Barclays' point of view, it would be terrible to sell [assets] to Diamond. They won't want to do this."

Atlas Mara and Barclays declined to comment.

Translated by Alexey Nevelsky