Absa and Barclays team up to conquer Africa

At long last, the unrelenting pressure of competitors and the persistent criticism of analysts have produced a result: nearly six years after buying a majority stake in Absa but carrying on living in parallel worlds, Barclays is finally coordinating its African strategy with the South African bank.

"Aligning Absa and Barclays Africa more closely is a key priority for 2011," Absa Ceo Maria Ramos said presenting the bank's annual results in Johannesburg last week. The idea is to work together to increase market share and to "build on an already strong franchise across the continent with 1,600 outlets and almost 15m customers in twelve countries."

Barclays CEO Bob Diamond was enthusiastic about prospects in the continent when presenting the bank's annual results in London last week. African earnings have gone up 81% and now account for 15% of total profit, a proportion destined to increase further, he said: "It's a great opportunity and by integrating with Absa we are going to have a real competitive edge in the fastest-growing area in the world."

Jerry del Missier, co-Ceo of Barclays Capital, echoed this: "We have a strong franchise in Africa and a real opportunity to be the leading player," he said. "We want to have one Africa strategy with Absa and coordinate to maximize efficiency".

As well as a strategy, Barclays and Absa also share a propensity to increase their costs, especially staff-related ones.

The British bank's salary bill rose 20% last year, despite a much-vaunted reduction in bonuses. But "headcount will be up slightly in 2011", Diamond said, and experts predict that Africa will be a growth area.

At Absa, staff costs went up by 16% to over half of total operating expenses after increases in wages of more than twice the inflation rate. This year cost-cutting is a must and there may be job losses in call centres and the data-processing business, Ramos warned, but African operations will have to be staffed with top-rate people.

In South Africa, recruiting experts expect Absa, and especially Absa Capital, to carry on recruiting top talent. "Absa is very active, constantly growing and seeking to expand, still hiring across the board," says Tine Erasmus, general manager of Network Finance, a specialist recruiting firm in Cape Town. "We expect the relationship with Barclays to grow further and the business to grow, especially as investment banking is doing very well."