IT HAS BEEN A TORRID TIME OF LATE for the international banking groups as they come CO terms with the damage done to the developed economies by the ongoing financial crisis. Many consider that damage self-inflicted as an era of excess comes to a close and the harsh reality of a flat global economy becomes apparent.
But for Barclays, a series of scandals has only added to the bank group's woes. One such scandal, the Libor imbroglio, led to the resignation of the chief executive Bob Diamond last year. Libor (or the London Inter-Bank Offered Rate--a device that set interest charges), had been manipulated by a number of commercial banks, including Barclays, to their advantage. Barclays was fined $45om for its part in this scandal by the US and UK authorities.
Diamond and other top executives at the bank stepped down over the scandal, to be replaced by Antony Jenkins who pledged to "reinvent" Barclays. That was some pledge when you consider Barclays' chequered history. Barclays' 17th-century founders were accused of profiting from the trans-Atlantic slave trade; and the bank's legacy in Africa was severely tarnished by its involvement with South Africa's apartheid regime.
Today, there is renewed criticism of the bank's involvement with the international arms trade; and allegations (now being probed by the UK's Financial Services Authority) that it loaned Qatar money to invest in itself.
Furthermore, it has emerged that one of the bank's most profitable divisions, called its "Structured Capital Markets" (SCM) business was a tax avoidance consultancy service.
It is against this backdrop that in February the bank's CEO, Antony Jenkins, closed the SCM business and, in his first strategic move, steered the bank into developing into a major banking force in Africa.
Of course, it was no slouch previously, being present in Botswana, Egypt, Ghana, Kenya, Mauritius, Seychelles, Tanzania, Uganda, Zambia and Zimbabwe. But in a deal that merges Barclays with the South African bank Absa, a new entity has been created: Barclays Africa Group Ltd. It combines Absa with Barclays' operations in nine countries.
It will exclude Barclays Egypt and Barclays Zimbabwe due to the difficulty of arriving at an accurate valuation of the businesses' assets. The Barclays Africa Group will have nearly 14.5m customers, 1,300 branches and employ 43,000 people...