NEWS

Barclays Plc has sought regulatory approval to establish a subsidiary in Nairobi that will handle back office operations for the lenders’ Africa operations— making it the largest investment by the UK Bank in Kenya.

 

The UK bank is seeking the permission of the Central Bank of Kenya to establish the unit dubbed Barclays Shared Services (BSS) that handles functions such as opening of accounts, loan approvals, and card services for the lender’s nine countries in Kenya.

 

The BSS will be fully owned by Barclays Plc and has already hired 70 employees, most of them Kenyans. It aims to increase the number to 1,000 by June 2013 that will include expatriate staff, people familiar with the plan told the Business Daily.

 

The bank is expected to spend billions of shillings on the venture, especially on IT equipment and infrastructure, a move expected to bolster Nairobi’s rising profile as a regional financial hub but lead to job cuts in countries like Tanzania, Uganda, Nigeria, and Zambia as Barclays races to create seamless operations on the continent.

 

Abdi Mohamed, the Chief Operating Officer of Barclays Bank of Kenya confirmed the plan to open the BSS in Nairobi but did not give details. “Yes, we have made applications for the hosting of the shared services in Nairobi and full details will come early next year,” Mr Mohamed said in a telephone interview Monday.

 

The new outfit is also awaiting regulatory approval in other countries where part of their back office services will be run from Nairobi. Barclays’ subsidiaries in Egypt and South Africa will be excluded from the Nairobi shared services plan.

 

People familiar with the plan reckon that the bank’s Africa units will pay the Nairobi-based BSS a fee for handling their back office operations as the UK lender seeks a bigger piece of the continent’s financial service market.

 

Barclays Plc is re-organising its Africa business into a one seamless operation dubbed “One Africa.” It acquired a 55.5 per cent stake in South Africa’s third-largest bank Absa in 2005 but the two have remained separate entities outside South Africa, running parallel operations in Tanzania.

 

Barclays Plc is set merge operations in Ghana, Kenya, Botswana, Zambia, Uganda, and Tanzania with Absa into an Africa unit. The shareholding of the Kenyan unit will be held by Barclays Africa Limited —which will be fully owned by the South African bank.

 

This will happen through a share swap transaction that will increase the UK’s lender’s stake in the South African unit to 62.3 per cent from the current 55.5 per cent. Kenya will be the third location of BSS after India (in New Delhi and Chennai) and UK (at Barclays’ London headquarters) and the first in Africa, lifting Nairobi’s standing as growing financial services hub.

 

Nairobi has over the past five years attracted major banks from West Africa seeking to establish subsidiaries and global lenders who have opened representative offices to tap growing regional trade. Standard Chartered Plc turned its Nairobi office into a regional hub, Visa International, a payment systems services company has also started operations in Nairobi to serve all markets in the region and US bank JP Morgan Chase is eyeing an office in the Kenyan capital.

 

Some of the banks that have set up shop in the country in recent years include Nigeria-based United Bank for Africa and Togo-based Eco Bank while CBK has so far licensed five representative offices of foreign banks such as HSBC, Bank of China and FirstRand.

 

“These developments support Kenya’s aspirations to be a premier financial services hub pursuant to Vision 2030,” CBK said in its latest Bank Supervision Report.

 

Barclays Africa is seeking to widen its business to include investment banking and insurance services following the consolidation.