By Moses Kaketo
As Barclays Africa finalizes plans to exit Uganda and Africa as a whole, regional and local banks have reportedly expressed interest in buying off the once mighty bank.
Barclays Bank plans to exit the African market through local consolidation. That is, local banks with capacity will be given the first priority.
Highly placed sources, told Newz Post that two local banks-Standard Chartered Bank and CitiBank are reportedly in talks with Barclay’s Africa management over a possible takeover of her Uganda subsidiary.
Barclay’s Uganda is the 5th largest Bank in Uganda boosting of assets worth Ugx. 1.4 trillion as of Dec 2014. The bank mainly targets the middle class and the high end.
According to industry experts-Whoever takes over Barclays Uganda must trade consciously-the bank is said to be sailing in a sea of bad debts/ loans it incurred a few years ago, while bank tried to open up the market. High fraud in loans and advances over the years have also affected bank’s performance. As such, the bank has been writing off huge bad debts. In 2013, the bank wrote off Ugx 10bn and 2014, the bank wrote off Ugx. 15bn.
The rather lukewarm performance saw the bank close down a number of her branches and off-site ATM’s in a bid to streamline operations and reduce on operation costs.
Across in Kenya, telecom giant, Safaricom and Kenya Commercial Bank have expressed interest in taking over Barclays Bank Kenya or perhaps all subsidiaries in East Africa-KCN operates in Kenya, Uganda, Tanzania, Rwanda, South Sudan. It is now spreading its wings into the DRC and Ethiopia.
When asked whether his bank was interested in Barclays, KCB group CEO Joshua Oigara said: We are very much open for business. The News (of Barclays exit) was tough, but it is not the only opportunity in the market.
Why CitiBank, Standard Chartered
It is said, all is not well at Standard Chartered Bank Uganda. The Bank is reportedly facing huge bad debts. According to analysts, buying Barclays Uganda would be such a good strategy to bury some of Standard Chartered current bad loans in the Barclays but also, he bank would benefit from Barclay’s bank’s Ugx. 1.4 bn assets.
The only challenge is that Barclays and Standard Chartered Bank branches seem to be in the same locations. This would mean closing some of the braches and this comes with job loss.
The Citi Bank’s slow growth over the years is attributed to its deliberate focus on Institutional banking-high end clientele and corporate especially of the USA, Europe and Asian origin-although these are big customers, they lead to single exposures and have low profit margins and transaction frequency.
Aware of this, the bank is now ready to evolve -one such strategy would be to acquire an existing Bank-Barclays, which targets the same markets as Citi Bank.
With the numbers (customers) and huge assets base including the countrywide network, Barclays’ is a good buy for Citi Bank’s expansion drive.
As to whether, the regulator, BOU will allow a local bank to takeover Barclays Uganda is another thing. Sources say a number of local banks, including Centenary Bank, Bank of Baroda, DTB, and Dfcu were interested in buying Imperial Bank Uganda. But EXIM Bank Tanzania was selected as the best bidder.
Whoever takes over Barclays bank must closely consider and weigh all the risks and opportunities before making final decision.
Recent bank takeovers in Uganda have turned ‘sour’. It is said that Barclays Bank never recovered after acquiring Nile Bank. The Global Trust Bank also took CMF micro finance. The former is no more and part of the problem was decision to acquire the Micro finance.
The Crane Bank is said to be ‘‘struggling’’ Their problems started with the acquisition of National Bank of Commerce. As to whether the Standard Chartered Bank or CitiBank can successfully takes over Barclays Bank is story for another day.
related: TOP 100 taxpayers in Uganda