Barclays Africa Group agrees to separate from Barclays PLC
The Barclays Africa group has agreed to separate from the UK-based Barclays PLC. The move is to allow Barclays Africa to operate as an independent pan African bank.
As a result, Barclays PLC has submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50 per cent, Maria Ramos, the Chief Executive Officer (CEO) of Barclays Africa said at a press briefing today, February 23, 2017.
The application which also requires the approval of South Africa Minister of Finance includes the terms of separation payments and transitional services arrangements, which both parties have agreed to, she indicated.
Additionally, the agreement provides for contribution by Barclays PLC totaling £765 million (R13.8 billion based on Dec 31, 2016 exchange rate) primarily to fund the investment required for Barclays Africa Group to separate from Barclays PLC.
She pointed out that Barclays PLC currently owns 50.1 per cent of Barclays Africa but given the reduction of Barclays PLC’s shareholding below the 50 per cent mark, Barclays Africa will be able to continue using the Barclays Brand at its operations outside of South Africa for three years.
Also on separation, Barclays Africa will receive certain services from Barclays PLC on arms’ length basis for a transitional period, typically up to three years.
“Separation has a number of implications for our business: It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation,” Ramos noted.
“Alongside a black economic empowerment scheme, Barclays Africa wants to create an equity preposition for our staff in the next 12 to 18 months. This will give our people the opportunity to benefit from share ownership, and to share in the future growth of our business,” she added.
On Barclays Africa Group’s performance for 2016, headline earnings increased by five per cent to R14.9 billion in 2016 compared to 2015, Ramos also said.
Slower economic growth resulted in increase impairments and non performing loans. South Africa’s economic growth is expected to have slowed to 0.4 per cent in 2016, while growth in the Group’s presence markets in the rest of Africa slowed to 3.7 per cent, its weakest level in more than a decade, she further said.
By Pamela Ofori-Boateng
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