Barclays Africa apologises for its role in rand-fixing

Barclays Africa apologised for its role in a rand-fixing affair involving more than a dozen banks, saying that it alerted regulators about the practice after suspending two traders.

“We deeply regret that this conduct took place within our organisation,” CEO Maria Ramos said on Thursday, without identifying the employees. 

“Those who contravened our rules will be held accountable.”

The Competition Commission listed more than a dozen banks, including Barclays Africa, in its probe earlier this month and named more than 30 traders for price fixing and market allocation in the trading of foreign-currency pairs involving the rand. Citigroup on Monday said that it agreed to pay a penalty of almost R70-million to settle the case and would make witnesses available to help prosecute other banks.

Barclays Africa’s Absa unit said in a statement on Thursday that the commission isn’t seeking any administrative penalty against the bank. The lender said it brought the conduct of the currency traders to the attention of the commission under the regulator’s leniency programme.

“How we conduct ourselves is, for me, non-negotiable,” Ramos said. The bank’s involvement in the rand collusion case is “unacceptable and incompatible with the values of this organisation.”

Under pressure
The finding comes as President Jacob Zuma and the ANC step up pressure on South Africa’s four banks, saying they should lend more to black clients. Zuma and the banks are also locked in a stand-off after the lenders closed the accounts of companies tied to his friends, the Gupta family, who are accused of using their relationship with him to influence government appointments and contracts.

The lender was also the target of protests outside some branches after a leaked draft report by the public protector said the lender may have benefited from a bailout provided to a bank it bought before the end of apartheid.

Barclays Africa will be making submissions to the public protector by the end of February, Ramos said. “We have factual and legal issues that we’ll take up because there are factual and legal inaccuracies. There have been a number of demonstrations and pickets. They haven’t at this stage impacted the bank’s operations in any way.”

Barclays Africa dropped 0.2% to R157.27 as of 1.22pm. It’s the worst-performing bank stock in South Africa this year, having declined 6.7% compared with the average drop of 3.5% on the six-member banks index.

Parent’s payout
Earlier, Barclays Africa said it will receive the equivalent of about $1.1-billion for costs associated with splitting from its United Kingdom parent, Barclays, and the creation of a programme to empower black investors. The payout is “a good outcome”, Ramos said, adding that it would leave the South African lender broadly capital and cash-flow neutral.

“Although the settlement will help offset the costs Absa will incur to make the necessary investments in their IT systems and to rebrand the African entities, the risks around successfully executing the divestment without disrupting operations remain,” said Meyrick Barker, an investment analyst at Kagiso Asset Management.

Once the parent company’s stake drops below 50%, Barclays Africa will have three years to rebrand its units in the rest of Africa, according to Ramos. The UK bank will pay R2.1-billion towards the creation of a black-shareholder programme that will include staff, Ramos said.

Earlier on Thursday, Barclays Africa said full-year net income rose 2.6% to R14.7-billion  from R14.3-billion a year earlier after the bank contained costs and increased lending to businesses. 

Earnings per share excluding one-time items rose 5% to R17.69, missing the R17.94 median estimate of 11 analysts surveyed by Bloomberg. Return on equity declined to 16.6% from 17% and the cost-to-income ratio dropped to 55.2% from 56%. – Bloomberg

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