Barclays Bank Africa separates from UK Barclays Plc

Fri, 24 Feb 2017 09:59:32 +0000

By Buumba Chimbulu

BARCLAYS Africa Group yesterday announced that it has agreed on conditions for operational separation with the United Kingdom based Barclays Plc which will allow it to be an independent Pan African Bank following the sale of majority shareholding in Barclays Africa over a period of two to three years.

Among the terms of conditions are that the British-based Barclays Plc would reduce it’s shareholding to below 50 percent from the current 50.1 percent it owns.

The bank believes that the agreement would unlock opportunities for Barclays Africa as an independent Pan African Bank.

Speaking at the round table media conference, Barclays Africa Chief Executive Officer Maria Ramos said that the separation would not have any impact on the bank’s clients on the continent.

“It is a good outcome that enables us to complete the separation and to provide continuity and improved service for our customers,” she said.

Ms Ramos said the agreement provided for contributions by Barclays Bank Plc totaling GBP765 million to fund the investment required for Barclays Africa Group after the separation.

She said the British Barclays would provide £515 million for investment required in technology, rebranding and other separation projects and £55 million to cover separation related expenses of which £27.5 was received in December 2016.

Ms Ramos said the British Barclays would further provide £195 million to terminate the existing service level agreement between the two banks, relating to the rest of Africa operations acquired.

“The expectation is that the financial contributions would neutralise the capital and cash flow impact of separation investments on the group over time,” she said.

She also announced that Barclays Plc had agreed to contribute an amount equivalent to 1.5 percent of Barclays Africa’s market capitalisation towards the establishment of the broad black economic empowerment scheme.

“Separation has a number of implications for our business. It gives us the opportunity to unlock the potential to do things differently and build momentum for our future as an African organisation,” she said.

She had since said Barclays Africa would continue investing for growth in the region which was positioned to benefit it’s footprint in economic growth.

Meanwhile, Ms Ramos announced that Barclays Africa Group registered positive growth in 2016.

She said the group’s revenue increased by 8 percent, outpacing the 6 percent in the cost of running the business.

Ms Ramos said the group’s headline earnings also increased 5 percent.

She, however, said slower economic growth resulted in an increase in impairments and non-performing loans.