Barclays in South African bid talks

BANKING group Barclays is in talks to cement its return to South Africa 18 years after pulling out because of apartheid.

The bank is ready to spend about £1.8bn in cash on a majority stake in ABSA, the country's biggest retail bank with 670 branches.

Talks are still at an early stage but if the deal goes ahead, it would be a flying start for Barclays chief executive John Varley. He succeeded Matt Barrett three weeks ago.

The UK bank is on the lookout for more overseas takeovers in countries where it already has a presence.

It snapped up Banco Zaragozano of Spain for £820m last year and is persistently linked to Deutsche Bank, though the German giant this week denied it is in discussions with any potential partners.

Barclays suffered a consumer boycott in the Eighties over its investment in South Africa, then under white minority rule, and sold its branch network in 1986.

It returned on a much smaller scale as a corporate lender in 1995 and also has a joint venture that sells Manchester United-branded credit cards.

The UK bank has yet to carry out due diligence and it must assess the appetite of ABSA's big shareholders for a deal.

Insurer Sanlem, which has a 21% stake, says it will listen to offers.