In a surprise move, Barclays announced in late September that it was in early discussions to buy a majority stake in South Africa’s second biggest bank, ABSA Group.

Barclays, which returned to South Africa in 1995, has built up a network of operations covering 11 countries in Africa and this acquisition, for an estimated minimum of $3.5bn, would consolidate its commitment to Africa where it already has 7000 employees.

ABSA, South Africa’s largest retail bank with a network of 670 branches and 4500 cash machines, had a Tier 1 capital of over $3bn and total assets of $48bn as at the end of March. If the discussions are successful, ABSA would be the first of South Africa’s “Big Four” to become foreign-owned. The bank has 6.3 million customers and its profits have more than doubled in the past two years as bad loans have declined and interest rates have fallen to their lowest in 23 years.

Barclays, which said it would not expect to issue ordinary shares to fund a potential transaction, surprised analysts, who in recent years had thought it might dispose of its African holdings. An acquisition of ABSA is expectedto raise Barclays’ African earnings by up to 50% from the existing level of 2%-3% of group earnings.

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