JPMorgan Chase & Co. (NYSE: JPM) has recently announced that it will support Barclays when it comes to selling off its African Unit and Egyptian Unit, a Bloomberg report states. The CEO of Barclays Jes Staley has indicated that the African Unit is on sale, after over a year of speculations surrounding this matter.
This subject is not disclosed to the public by the two parties. However, a reliable source states that the bank will assist the officials of Barclays Plc (NYSE: BCS), in order to advance the sale. JPMorgan Chase is one of the corporate brokers of Barclays, and is supporting the individuals who are connected with the mentioned deal.
It is important to take into account that the Barclays CEO Mr. Staley stated in an interview with Bloomberg that there are a lot of possible buyers in the market which are interested in the African unit. Just recently, the former CEO of JPMorgan Mr. Bob Diamond, as well as the Co-founder Atlas Mara has also displayed some interest when it comes to purchasing the African Unit. The JPMorgan CEO appears to be interested when it comes to expanding their holdings in the African region and purchasing the African Unit would be in line with their objectives.
The decision to sell the African Unit can be considered as one of the most significant restructuring measures that the CEO of Barclays is performing. It is interesting to take into account that 84 percent of the revenue is obtained from South Africa in Barclays African Group Ltd. With this, the devaluation of rand and the economic slowdown in South Africa has placed Barclays in a position to sell its stakes in the area. All in all, the revenue has been influenced by the slowing down of emerging markets, as well as the outflows in the capital.
Just recently, Barclays has been under significant restructuring as the company has undertaken significant job cuts of 6,000 employees during the last 4 months since the Barclays CEO took over. Aside from tat, it has also sold off its non-core assets, and reduced dividend to boost capital. The profits during the last quarter plunged and the firm has experienced significant litigation charges during the previous year.
The Egyptian Unit is reportedly worth over $500 million. This Egyptian business holds approximately 1,500 employees and 56 branches across the region. On the other hand, the African Unit could amount to around 1.5 billion pounds.
In other news, Barclays African Group Ltd intends to register less debt this year, as the growth in lending has become sluggish. Moreover, Barclays African Group already has less than 10 percent funding via debt capital markets as market players worry about recession in the economy of South Africa.
Several analysts believe that Barclays understands the threats amid financial market chaos and that making is business model simpler is the only way going forward. Just recently, the Barclays CEO proposed to turn his attention on the core businesses in the United States and United Kingdom by selling its 62.5 percent stake in Barclays African Group Ltd. within the next 2 years.