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Another milestone for Absa in Barclays separation

INCE / 23 JULY 2018 - 04.55 / STEPHEN GUNNION

The bank plans to complete the operational separation from its former UK parent in 2020 as it rebrands across the continent

The UK's Prudential Regulatory Authority and Financial Conduct Authority have approved Barclay's full regulatory deconsolidation of Absa, with effect from the end of last month.

The move is the next step in Barclays' departure from Africa after being present on the continent for close to a century. Absa has about two years to rebrand its operations and wean itself off of Barclays' systems. In preparation for the final split, Absa launched its new logo earlier this month as it changed its listed entity from Barclays Africa Group back to Absa Group. The brand will now have to be rolled out to more than 10 other countries across the continent where the Barclays brand is still used.

Regulatory deconsolidation represents a milestone in Absa Group's separation from Barclays PLC," Absa said in a statement."We expect to complete the operational separation in 2020, including rebranding our subsidiaries in the rest of Africa and transferring off the services provided by Barclays PLC."

Barclays bought a 56% stake in Absa in 2005 and later increased it to 62% in a deal that transferred its operations across the continent to Absa. By selling its stake down to 14.9% it no longer needs to consolidate Absa in its accounts, strengthening its capital position. The shareholding will now be treated as a 250% risk-weighted asset, while the deconsolidation will add 10 basis points to its Common Equity Tier 1 ratio.

Barclays is paying Absa £765 million for separation costs and is making a R2.1 billion contribution to black economic empowerment as part of the settlement.

Absa's shares closed 3.3% higher at R161.99 on Friday. The FTSE/JSE Banks Index gained 2.5%.



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