Barclays Africa Group will spend £765m pounds (about Shs3.8 trillion) in the rebranding exercise to Absa, which was announced by the group chief executive yesterday.
According to Mr Rakesh Jha, the money for the rebranding exercise was provided for by Barclays PLC in their terms of separation agreement.
The money will be distributed according to the individual countries rebranding plans.
Mr Rakesh said the Barclays Africa Group Limited will be renamed Absa Group Limited in due course and trade as Absa across its operations (currently branded Barclays) in Africa, pending shareholder and regulatory approvals.
UK-based Barclays PLC announced on March 1, 2016 that it intends to sell the majority of its shareholding in Barclays Africa over a period of two to three years. Since then, Barclays PLC has reduced its shareholding from 62 per cent in 2016 to 14 per cent as at December 2017.
According a statement released by Absa earlier, Barclays PLC submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50 per cent. The application, which also required the approval of the minister of Finance, included the terms of the separation payments and transitional services arrangements, which have been agreed between Barclays PLC and Barclays Africa.
The agreement provides for contributions by Barclays PLC totaling GBP 765 million (Shs3.8 trillion) primarily to fund the investments required for Barclays Africa Group to rebrand to Absa.
The expectation is that the financial contributions will neutralise the capital and cash flow impact of separation investments on the group over time.
Ms Mario Ramos, the Barclays Africa Group Chief executive officer, in a press briefing, said: “…I am announcing our intention to change the name of our holding company from Barclays Africa Group limited to Absa Group limited in June.” However, she said this is subject to the receiving of the appropriate regulatory and shareholder approval.
Absa is currently the brand of the Barclays Africa Group’s South African business. According to a statement released by the group, the Absa brand has substantial equity as one of the largest banks in South Africa and enjoys recognition in many of the countries in which Barclays Africa operates under the Barclays brand currently.
“We are resetting our business with a bold, new growth strategy that leverages our existing footprint and market insights,” Ramos said.
Meanwhile, Barclays Africa Group also released its first annual financial results since the successful conclusion of the reduction by Barclays PLC of its majority shareholding in Barclays Africa Group last year.
The group reported a 4 per cent increase in headline earnings in 2017 as impairments declined substantially from a high base in 2016. Return on equity of 16.4 per cent remains strong.
According to Rakesh, Barclays Africa Group reported a solid balance sheet assets of R1.2 trillion and strong capital and liquidity levels – these are measures of the strength of buffers banks have in place to protect customer deposits.