27 November 2007
interview
Kampala — Barclays Bank has hit the road running following its acquisition of Nile Bank. It has expanded by several branches and ATMs. The Barclays' Group Vice Chairman Gary Hoffman gives Fredrick Masiga the bigger picture
Over the last few years Barclays Bank has moved into retail banking probably finding a new niche for business. Can we say it is a global trend for the bank or is it only for this market?
If I get back three or four years ago, Barclays Bank made nearly 80 per cent of its profits in the UK and 20 per cent outside the UK and the board set the target to diversify earnings to become one of the global universal financial services company and specifically to earn 50 per cent of our income from outside the UK and in 2007 we achieved that; not because the UK market stood still but because other markets have grown.
We have one of the biggest institutional asset managers in the world the Barclays Global Investments which has $2 trillion. We are growing Barclays' wealth business internationally and Barclays Card which was mainly a UK credit card company has expanded rapidly overseas in the US, in African and across emerging markets it has become more of an international business.
What does Africa offer for your business?
We have been in African for more than 100 years and in Uganda for more than 70 years.
Five years ago, the first question I would have got on a visit to Africa would have been 'Is Barclays committed to Africans?' Whereas now no one is asking the question now whether Barclays is committed to Africa because they are seeing there is rapid growth.
South Africa is an important part in our expansion plan but what I have been struck by in the last three day here in Nairobi and Kampala is the momentum in East Africa and the spirit of cooperation across the region which has not always been there and particularly at Barclays where I have met a lot of staff; the energy and excitement for the growth is an important part of the portfolio.
That energy, though, is coming under threat from the Chinese interest in Africa. We know that their investment in the Standard Bank; the bank with the largest capitalisation in Africa could mean that you develop a new plan to deal with it.
If I look at South Africa, then clearly nearly three or fours years ago now we acquired a majority stake in ABSA which is a fantastic brand in South Africa.
We welcome healthy competition; competition is good news and we are very confident in our people and our universal banking model. Recently, Barclays had an investment from the Chinese Development Bank so it is the Chinese showing confidence in the Barclays model.
You made a massive takeover attempt in ABN Amro but withdrew almost with the same ferocity. Was it a bad deal?
We regarded the opportunity presented by ABN Amro as an accelerator of our strategy.
Our strategy is to become one of the handfuls of global universal banking models.
We have been growing very strongly organically and we have made a small number of medium and small acquisitions in Africa including Nile Bank. We use acquisitions or deals as an accelerator of our business.
The ABN Amro would have accelerated our strategy internationally and particularly in global retailing and commercial banking. But we were not prepared to do that at any price for our shareholders and as the market weakened and asset prices reduced it was clear to us that we would not be doing our shareholders a good service by paying the price that was offered.
Your acquisition of Nile Bank has been criticised in some quarters as extravagant.
We made the right decision. We see it as an accelerator. We are confident with the price we paid. I am personally very impressed with the speed of integration. It was great to see the 286 Nile Bank employees have been quickly made to feel part of Barclays and the branches have all been branded Barclays.
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