Barclays Africa will continue using the Barclays brand in its operations outside South Africa, including in Kenya, for three years following the reduction of Barclays Plc’s shareholding of the lender below the 50 per cent mark.
Barclays Africa will also receive “certain services” from Barclays Plc “on arms’ length basis” for a transitional period, up to three years, the bank said yesterday in a statement.
“Separation has a number of implications for our business. It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation,” said Barclays Africa CEO Maria Ramos in the statement.
“We remain firmly focused on building a leading standalone pan-African financial institution.”
Barclays Bank of Kenya managing director Jeremy Awori had last year sought to reassure customers that the ongoing sale of stake by its London parent company would not affect local operations.
The London-based Barclays Plc announced in March last year that it intends to sell the majority of its stake in Barclays Africa over a period of two to three years.
“I would like to make it clear that any decisions concerning the operations of Barclays Kenya can only be made by Barclays Africa Group in consultation with other investors who are shareholders in this business,” he said then.
Consequently, the announcement does not impact the shareholding and ownership of Barclays Bank of Kenya and will not have any impact on the day to day running of our business, or on our customers, clients and colleagues in Kenya.”
The British banking behemoth Barclays Plc will pay £765 million (Sh87.2 billion) to its African subsidiary as an exit bill once it divests from the continent in under three years, details of the divorce settlement released yesterday showed.
Barclays Plc has submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50 per cent. Barclays Plc owns 50.1 per cent of Barclays Africa from an initial 62.3 per cent. Barclays Africa Group holds a controlling stake of 68.5 per cent of Barclays Bank of Kenya and stakes in 11 other operations in Africa.
According to the terms of the separation, payments and transitional services arrangements, which have been agreed between Barclays PLC and Barclays Africa the exit agreement provides for contributions by Barclays Plc totalling £765 million (Sh87.2 billion) primarily to fund the investments required for Barclays Africa Group to separate from Barclays PLC.
They include £515 million (Sh66.5 billion) for investments required in technology, rebranding and other separation project, £55 million (Sh7.1 billion) to cover separation related expenses, of which £27.5 (Sh3.5 billion) was received in December last year and £195 million (Sh25.2 billion) to terminate the existing service level agreement between Barclays and BAGL, relating to the rest of Africa operations acquired in 2013.
Barclays Africa Group said in a statement yesterday the expectation is that the financial contributions will neutralise “the capital and cash flow impact of separation investments in the group over time”.
Credit: Business Daily