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Will Barclays Sell Zimbabwe Unit to First Merchant Bank?

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Barclays PLC (BCS - Free Report) is in talks to sell 68% stake in its Zimbabwe unit – Barclays Bank of Zimbabwe (BBZ) – to Malawi-based First Merchant Bank. The company had placed Zimbabwe unit along with its other African operations (Barclays Africa and Egypt unit) under its Non-Core division last year.

Notably, the remaining 32% stake in BBZ is traded on the Zimbabwe stock exchange. The unit employs nearly 1,000 workers and has 38 branches. Per Thomson Reuters data, the unit has market capitalization of more than $60 million.

Further, with deposits of $391.7 million and total assets worth $476.2 million as of Dec 31, 2016, BBZ is an attractive investment opportunity. Hence, Barclays’ decision to divest stake in it has attracted significant interest among local and foreign investors.

Both the companies have confirmed the ongoing talks. While First Merchant Bank revealed the same in a statement on its website, Barclays’ spokeswoman affirmed the news.

Nonetheless, the deal value was not disclosed by either of the parties. Moreover, the deal, if finalized, will require approvals from the regulators of Malawi and Zimbabwe.

Notably, Barclays is on track to wind down its Non-Core division by mid-2017, driven by continued divestiture of non-core operations world-wide. Last year, the company divested its 12% stake in Barclays Africa Group. Furthermore, it plans to lower the stake to below 20% and intends to keep a minority interest in the unit.

Also, Barclays has agreed to sell its Retail and Corporate Banking business in Egypt to Attijariwafa Bank S.A. Apart from these, the bank sold several operations across the globe, thereby simplifying its business and improving efficiency.

Driven by these efforts, investors seem to be bullish on the stock. Barclays’ shares increased 29.5% over the last one year, outperforming the gain of 23% for the Zacks categorized Foreign Banks industry.



Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Several other major global banks including HSBC Holdings plc (HSBC - Free Report) , Deutsche Bank AG (DB - Free Report) , Credit Suisse Group AG and UBS Group AG have been also restructuring and simplifying operations to improve efficiency and increase profitability.

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