Barclays is today expected to announce that it will buy a majority stake in South African bank Absa for more than £2.7 billion (€3.98 billion), in what will be the largest overseas investment into South Africa since apartheid ended 11 years ago.

Last night, South African Finance Minister Trevor Manuel said he had given his approval for the deal subject to certain conditions.

Barclays, which was the biggest bank in South Africa before it pulled out 18 years ago during the apartheid era, is expected to announce it will pay about 82 rand (€10.61) plus a dividend of R1.8 for a stake of more than 60 per cent in Absa.

Absa is South Africa's third-largest bank by assets, but is the country's largest retail bank with a customer base of 6.3 million and about 670 branches.

The deal represents a premium of more than 34 per cent to Absa's share price when the talks were announced eight months ago.

Absa's biggest shareholders, insurer Sanlam and investment holding company Remgro with about 30 per cent of shares, are expected to sell out completely.

Last night, Mr Manuel would not comment on "market sensitive" information but said conditions of the deal included that Barclays "maintain the South African character" of Absa management and board. He also stipulated that Absa's chief executive and the majority of its executive management will be South African citizens and residents.

He has also asked Barclays to furnish the South African Reserve Bank with a letter of comfort confirming it will "maintain the financial soundness of Absa". Barclays would not comment last night but it is thought these conditions are acceptable to the bank.