Barclays feels that Absa could not tap the market with full potential and failed to take advantage of its strong presence in African continent, and this proposed move is an attempt to fill such void.
The consolidation of both operations will certainly affect their operations in countries including Kenya, Botswana, Zambia, Tanzania and Ghana.
The deal is seen as Barclays next step to hold stronger grip on the emerging markets, and douse the negative impact it earned on domestic front as well as with Libor Scandal.
Barclays said in a statement, "The proposed combination would be subject to, among other things, the approval of the Boards of Barclays and Absa (the latter on the recommendation of the independent members of the Absa Board), as well as Absa shareholder approval and regulatory approvals in the relevant jurisdictions."
"There can be no certainty that these discussions will lead to a combination. The proposed combination would not be expected to be completed until 2013."
Issuing a statement over the consolidation of operations, Absa Group and Barclays Africa chief executive Maria Ramos said, "This proposed combination of the majority of the Barclays Africa businesses with Absa is the next logical step in delivering our "One Africa" strategy, which Barclays PLC announced last year."
"We have already consolidated the regional offices for Absa Africa and Barclays Africa, as well as introduced a global product strategy for banking across the continent. This proposed combination of the businesses will mirror the managerial and operational structure we have already put in place."
London-based Barclays is the second largest bank in the UK by assets, which acquired nearly 54% of Absa in 2005 for $4.5bn to expand in emerging markets.
Barclays’s pretax profit from Africa, including the bank’s holding in Absa, grew £910m, up by 13% in 2011 and contributed 15% of the bank’s £5.97bn pretax profit.
Barclays and Absa trades in 12 geographies and have more than 14 million customers, as per the Absa’s annual report.
