30th June 10 The Guardian Reporter The British banking conglomerate, Barclays is in the process of taking over the National Bank of Commerce (NBC) branch network in Tanzania from both the government and its South African umbrella group, Absa Group Limited. According to media reports, the World Cup has played a role in the two foreign banks attitude to reverse views expressed in February this year to decline any mergers or takeovers, according to media reports. The Minister for Finance, Mustapha Mkulo, could not be reached for comment yesterday, but South African media reports quote the Absa Group Limited Chief Executive Officer, Maria Ramos, confirming the process to be in progress. With Barclays there is ongoing work and there isnt a start date for working together in a particular country, Ramos is quoted as saying in South Africa, adding that Absa, which sold a controlling stake in the lender to Barclays five years ago and has been looking for ways to boost growth in Africa through the partnership, (is to) discuss merging the banks Tanzanian operations. Absa plans to hold an initial public offering for its 55.5 per cent-owned National Bank of Commerce Limited in Tanzania and list it on the Dar es Salaam Stock Exchange. Ramos said the public offer, which will dilute the states holding in NBC, as its known, may take place by the first quarter of next year, after which a merger with Barclays may take place. The remaining shares are Tanzania government owned. According to the media reports said Absa Group Limited, South Africas third-largest lender, said its not worried about the impact of stress tests on parent company Barclays Plc. We went through stress testing last year and all it showed was that Barclays was in a strong position, Ramos said in an interview at the Fortune Global Forum in Cape Town yesterday. What is important is that if thats whats going to be done, that everyone gets on the same page, Ramos added. Banks in the UK, where Barclays is based, are facing stress tests and may be subject to levies and taxes. The US has also introduced financial regulations that the government says will protect consumers, curb risks, boost surveillance of emerging threats to markets and give regulators more emergency powers to avoid future taxpayer-funded bailouts of too-big-to-fail firms. If the legislation is successful, it may influence banks globally. The soccer World Cup, which began in South Africa on June 11, has boosted volumes through Absas ATMs and at its foreign exchange outlets, Ramos said. The event will pay dividends for the country for a long time, she said, adding that a South African bid to host the Olympics may have some value. Corporate bad debts at Absa are on target to peak in the first half, with Absas fiscal first half ending on June 30, Ramos said. In February 2008, Absa shelved plans to combine its African business with that of Barclays, which owns about 59 per cent of South Africas largest retail bank. The global financial crisis forced Barclays to focus on its UK operations while Absa decided to conserve capital. The lender will look at acquisitions in Africa if they meet the banks criteria, Ramos said. In February this year, Absa was said to be well capitalised with a capital adequacy ratio of 13.7 per cent and SAR 5.1bn in cash on hand. Rivals Standard Bank Group Limited and FirstRand Limited are also building networks in Africa. Absa climbed 1.9 per cent to ZAR 119.70 in Johannesburg trading, bringing this years gain to 11 per cent. In South Africa, that made it the third best performer behind Nedbank Group Limited and Standard Bank Group Limited on the five member FTSE to JSE Africa Banks Index. But the bank said earnings will remain under pressure for the rest of the year as South Africas economy slides into its first recession in 17 years and consumer spending remains muted even after five interest rate cuts since December 2009. While impairment charges at the retail bank may peak by the end of 2010, bad loan losses at its commercial banking division will increase, Finance Director Jacques Schindehutte said. Absa, which had been planning to expand in Africa along with parent company Barclays, had earlier this year been seeking to boost its earnings after South Africas first recession in 17 years hurt consumer spending. The Johannesburg-based lender has operations in Mozambique and Tanzania and may make an acquisition in Namibia, while Barclays operates in countries like Ghana, Uganda, Kenya and Zimbabwe. Neither of them have operations in Nigeria. We are very keen on Nigeria, Ramos said. The lender, which didnt register with the Central Bank of Nigeria to examine buying a stake in one of the countrys 10 rescued banks, sees the West African country as the obvious place to go, and Ramos said it remains on the radar screen. Absa said on Feb. 16 that full-year profit in 2009 fell 36 percent after bad debts surged and it lost money on equity investments. In the first half of 2010, the companys asset growth has been pretty muted, Ramos said, adding that bad retail loans may have peaked, while corporate bad debts may only start to decline after mid-year. Absa Group Ltd with majority shareholding in NBC has been looking at the possibility of an added African expansion; but the plans hatched in 2009 came at the same time as the sale of shares of operations in Angola, suggesting a fund raising plan to raise capital for acquisitions. In June 2009, the Group sold its 50 per cent stake in the Angola Banco Commercial Angolano Sarl for an undisclosed sum, leaving the lender with operations in Mozambique and Tanzania. The National Bank of Commerce was recently voted the continents best commercial bank. Absa is said to plan using its investment banking business to expand into Africa and may make acquisitions after reporting a slump in first-half profit, according to recent reports. We ere going to be focusing on the investment banking side through Absa Capital, Ramos who only recently became chief executive said. We will be looking at an Africa strategy afresh. THE GUARDIAN: 'Barclays Bank takes over NBC next year'