Barclays Capital cuts jobs in UK but not in Africa
The City's loss could be Africa's gain. Barclays Capital announced this morning that it has begun a consultation process to reduce headcount in the UK, following months of slow activity and falling earnings. Analysts say revenues this year could be down a fifth on 2009 and hundreds of jobs are at risk.
But the investment banking arm of Barclays specified that despite the retrenchments in the UK it would "continue to hire across those parts of the business that are growing." There are reports of BarCap seeking to add people to its Asian operations, particularly in Singapore, but Africa is also regarded as a growth spot where the bank is seeking to recruit.
Barclays' businesses in Africa have made the fastest-growing contribution to the bank's earnings this year. While earnings in Western Europe fell, Barclays Africa, which operates in eleven countries, reported an 8% rise in pre-tax profit in the first half of 2010. This has persuaded executives to do more and do better to exploit the bank's historical and deep-rooted presence in Africa and its relationship with Absa, the South African bank Barclays took control of five years ago.
Antony Jenkins, head of global retail banking at Barclays and an Absa board member, says that booming sub-Saharan Africa, expected to expand by 5.5% next year, will be at the centre of the bank's expansion strategy in the next few years and Absa will be used as a springboard for growth. Absa Ceo Maria Ramos sits on the Barclays executive committee, unlike her predecessor. Barclays' plan is to grow in parallel with Absa Capital, which, says Ceo Stephen van Coller, is "totally plugged into the Barclays world".
Competition is stiff among foreign banks, all keen to get a slice of the African pie. BarCap, for example, is only in 5th place for bookrunner of debt capital market deals in sub-Saharan Africa, which is expected to be a fast-growing market, while Deutsche Bank is in first place. Standard Chartered and Hsbc are strong competitors in all fields. Absa Capital is also eyeing expansion: it is recruiting, looking for new revenue streams and hoping to move strongly into the M&A space.
"The opportunity in Africa is stronger than anywhere else currently", says Anton Apps, director of Anton Apps private recruitment firm in South Africa, which specialises in finance and banking. "The economic driver is better than elsewhere and businesses are harvesting the flow. Johannesburg is the portal through which the bulk of investment activity in Africa is being channelled and it is establishing itself as the capital of head offices for the African continent."
The Absa connection gives the British bank extra leverage, which Barclays now intends to fully use.
