Barclays reaches split deal with African subsidiary
Barclays has agreed to pay Barclays Africa nearly $1bn to fund investments required for it to split from its African business.
In March last year, Barclays had revealed its intentions to divest majority of its stake in the African subsidiary over a 2-3 year period as part of an overhaul program.
The company filed an application to the South African Reserve Bank seeking its approval for reducing its stake in the African subsidiary to below 50%.
Barclays Africa CEO Maria Ramos said: “It is a good outcome that enables us to complete the separation, and to provide continuity and improved service for our customers.”
Barclays’ application would also need an approval from the South African Finance Minister. It features the conditions of the payments for separation and arrangements of transitional services, agreed between Barclays Africa and its parent company.
For Barclays Africa, the separation is expected to unleash scope to operate as an independent bank throughout Africa.
As part of the £765m separate payment, Barclays will pay its subsidiary R8.6bn (£515 m) to cover investment costs in rebranding, technology as well as other separation projects.
For separation related expenses, it will pay R900m (£55m) and to scrap the current service level agreement Barclays and BAGL in the connection to the 2013-acquired Rest of Africa operations, it has agreed to pay R3.3bn (£195m) to the African bank.
As of now Barclays has a 50.1% stake in Barclays Africa and upon further reduction, the African bank can continue using the UK bank’s brand for three years for its operations outside of South Africa.
Barclays Africa will be entitled to certain services from the UK bank during the transitional period which could be up to three years.
Ramos concluded that there will be a number of implications for Barclays Africa’s business but also gives opportunity to untap its potential to do things differently, and gather energy and momentum for the long run as a pan-African institution.
Image: Barclays Bank HQ in Docklands, London. Photo: courtesy of Secretlondon/Wikipedia.org.