The return of Britain's Barclays to South African retail banking after nearly two decades may alter its economic landscape, signalling a successful transformation since the end of apartheid, analysts said.
The third-biggest British bank this week offered 33.0 billion rand (US$5.47 billion) for up to 60 percent of Absa, South Africa's fourth-largest bank.
When the deal goes through it will be the biggest single foreign investment in the country since 1994 -- when apartheid rule ended -- and will have far-reaching implications for the banking sector.
"The firm intention of UK-based Barclays Bank to acquire a majority shareholding in Absa Group could change the competitive landscape of the South African banking sector," according to international credit-ratings agency Standard and Poor's.
Barclays was forced to leave the country in 1986 under pressure from anti-apartheid activists, but re-established a small investment banking presence there 10 years ago.
"South Africa is particularly exciting because of the growth which is going on there," a Barclays spokeswoman told reporters.
"There are huge prospects there and that's what attracted us really," she added.
The retail banking market was expected to grow by around 15.0 percent over the medium term as only a third of South Africans currently had access to retail banking services, she said.
Absa -- the Amalgamated Banks of South Africa -- was formed in 1991 from the merger of several banks and operates 675 outlets with seven million customers.
Barclays finance director, Naguib Kheraj, estimated that after the purchase of Absa as much as 10.0 percent of the group's profits would come from South Africa.
Pre-tax annual profit at Barclays stood at ?4.6 billion (US$8.6 billion) last year.
Although other African countries offered enticing levels of economic growth, South Africa seemed the most lucrative investment -- and the least risky on the continent.
"South Africa has attractive macro-economic features," said Teather and Greenwood analyst James Leal, adding that it was also fairly stable politically in comparison with some other African countries.
According to a recent report by the International Monetary Fund (IMF), South Africa -- the region's largest economy -- would be the engine driving growth on the continent this year.
Economic growth was expected pick up to 4.0 percent this year after 3.7 percent last year, supported by buoyant domestic demand that reflects low interest rates, booming housing prices and expansionary budget policies, the IMF said.
Barclays would not be the first British bank to return to the region.
British-based emerging markets banking giant Standard Chartered won a licence to open a branch in Johannesburg in 2003.
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