Barclays in Talks to Buy Controlling Stake in Absa

Barclays Plc, the U.K.’s third-biggest lender, said it’s in talks to buy a controlling stake in Absa Group Ltd., South Africa’s fourth-biggest bank.

Discussions are at an “early stage,” London-based Barclays said in a Regulatory News Service statement.

An acquisition of “Absa will be a huge vote of confidence in South Africa’s economy and its banking industry,” said Kokkie Kooyman, who helps manage the equivalent of $31 billion at Sanlam Investment Management in Cape Town, Barclays said it was talking with Absa. “We can definitely expect more foreign takeovers of local banks, as banks are like lemmings and tend to follow each other.”

Shares of Johannesburg-based Absa have soared 76 percent over the past year through Wednesday’s close, making them the best performer on the five-member FTSE/JSE Africa Banks Index, which rose 49 percent during the same period. Shares have climbed as profits were buoyed by a decline in bad loans and the lowest interest rates in 23 years. Talk of a foreign bid has also fueled bank stocks.

A bid of 70 rand a share would be considered “fair value” for Absa, said Neville Chester, who helps manage the equivalent of $9.5 billion at Coronation Fund Managers in Cape Town.

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