Business In The News

Barclays agrees to pay R15bn to separate from African arm

CAPE TOWN – Barclays Africa on Thursday said the terms for its operational separation from UK-based Barclays PLC had been agreed, including separation contributions from Barclays PLC of around R14.9 billion, which includes provision for a broad-based black economic empowerment scheme.

The separation contribution is expected to “neutralise the capital and cash flow impact of separation investments on the group over time”.

The agreed contribution comprises £515 million for investments required in technology, re-branding and other separation projects; £55 million to cover separation-related expenses, of which £27.5 million was received in December; and £195 million to terminate the existing service level agreement between Barclays and Barclays Africa relating to the Rest of Africa operations acquired in 2013.

Full details of the broad-based black economic empowerment scheme were “still under consideration”, but the statement confirmed that Barclays PLC had agreed to contribute the equivalent of 1.5 percent of Barclays Africa’s market capitalisation, or R2.1 billion (based on a Barclays Africa’s share price of R168.69 on December 31), towards the establishment of such a scheme.

The statement said: “The agreement is expected to unlock opportunities for Barclays Africa as an independent pan African bank.”

Maria Ramos, Barclays Africa chief executive, added: “It is a good outcome that enables us to complete the separation, and to provide continuity and improved service for our customers.”

Barclays PLC announced on March 1, 2016 that it intended to sell the majority of its shareholding in Barclays Africa over a period of two to three years.

Thursday’s statement noted that Barclays PLC had submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50 percent. The application also requires the approval of the minister of finance.

– African News Agency (ANA)

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