Bob Diamond is arguably the best CEO Barclays ever had and the confirmation that he’s trying to buy Barclays’ Africa assets just cements that theory.
Atlas Mara, Diamond’s financial services group that acquires other banks in Africa to eventually become the largest firm of its kind on the continent, confirmed in a statement on Tuesday that it is indeed in talks.
In response to recent press reports regarding interest in purchasing Barclays Plc’s 62.3% stake in Barclays Africa Group Limited, Atlas Mara Limited acknowledges that it has had discussions with a consortium of investors that is exploring an acquisition of Barclays’ stake in Barclays Africa and a potential combination of Atlas Mara with Barclays Africa.
Members of the Consortium include Atlas Merchant Capital, founded by Bob Diamond, and the Mara Group, founded by Ashish J. Thakkar.
It highlighted how “given the significant complexity and early stage of the discussions with the Consortium, there can be no assurance that the transactions discussed above, including the Potential Combination, will be completed.”
It’s pretty sweet revenge for Diamond as the deal would mean snapping up one of his old employers’ most profitable assets — returns from
Barclays’ Africa unit far outstrip those of the investment bank.
For example, in 2015, return on tangible equity for Barclays Africa banking was at 11.7% compared with 6% at the investment bank. Earnings also surged 11% last year. The unit is worth around 122 billion South African rand (£5.9 billion $8.5 billion) in market cap.
Diamond has always had an eye for what makes a profit and how to run an investment bank and right up until a group of traders in Barclays were found to have attempted to rig LIBOR — he was one of the world’s most successful banking CEOs.
In March, when rumours of the potential deal circulated, the FT said Diamond’s acquisition of the Africa unit could be Barclays’ “nightmare scenario:” “Imagine the boardroom two years hence, when news breaks that Diamond is floating the business for twice what he paid for it. The horror!”
“Earn success every day”
Diamond left his post as Barclays’ boss soon after the lender became the first bank in the world to settle with US and UK authorities after the LIBOR scandal.
LIBOR — or the London Interbank Offered Rate — is the daily measure meant to show the rate at which banks will lend to each other and is used to set the price of hundreds of trillions of dollars worth of financial products.
But up until then Barclays was directly competing with Wall Street behemoths and successfully managed to secure funding from Qatar in order to avoid a bailout from the government during the financial crisis.
He was a Wall Street man on the Square Mile. An American rock star in The City.
Diamond’s motto was “earn success every day,” and that was his employees’ war cry. During Diamond’s reign, Barclays was all about risk, high returns, and a focus on cutting-edge trading technology. Retail finance was a mere sidecar to keep consumer operations in order.
Despite not being directly implicated in the LIBOR fixing, Diamond was largely blamed for fostering the “toxic culture” that led to the bank’s fixing fine.
He was then replaced by the now-fired CEO Antony Jenkins — known as the “Mr. Nice” of banking who was the bank’s retail chief before his elevation. He was the exact fit for what Barclays was looking for at the time — someone to keep the public and politicians happy after the Libor crisis. His clunky motto was “helping people achieve their ambitions, the right way.”
He was the antidote to Diamond. And he was fired in 2015. Barclays then hired Jes Staley who was tipped to unravel everything Jenkins had done.
However, after Staley unveiled a loss for 2015, a new structure, and his proposed sell-off of Barclays Africa — it looks like the bank is giving Diamond all the tools he needs to build his own empire.
Staley’s Barclays Africa unit sell-off is incredibly myopic. The short-term gains from a sale should be outweighed by the prospects of greater returns.
But this is why and where Diamond proves his mettle. Much like his careful long-term craft of building Barclays into a globally competitive bank — he is already creating his own empire through long-term views of Africa.
When Diamond left Barclays in 2012 he quickly set up Atlas Mara in 2013 — a London-listed group that provides a vehicle for investing in African banks. Basically it was formed to undertake the acquisition of target banks in Africa.
Atlas Mara is already a success. It raised $635 million (£441 million) on the London Stock Exchange, has 1,600 employees, and $2.6 billion in assets.
Diamond may have set up Atlas Mara relatively quickly but the group provides a comprehensive explanation on its site and through investor presentations about how Africa may still be developing but the long-term returns could be massive.
So watch this space. Diamond may not be in The City or on Wall Street anymore but he is creating his own empire which may make Barclays kick itself for letting him walk out the door in the first place.