Bar­clays plc likely to foot de­merger bill in Africa

CityPress - - Busi­ness - GOD­FREY MU­TIZWA busi­ness@city­

Bar­clays Africa is set­ting up a team to man­age the process of sep­a­rat­ing op­er­a­tions and sys­tems from hold­ing com­pany Bar­clays plc, but says the cost will not be known for a while.

Bar­clays Africa chair­per­son Wendy Lu­cas-Bull told City Press that the process was be­ing care­fully man­aged to­gether with Bar­clays plc, but it was too early to de­ter­mine when it would be com­pleted – and if it would have fi­nan­cial im­pli­ca­tions for the group.

“We are set­ting up a ded­i­cated project of­fice that will be ad­e­quately re­sourced and manned by suf­fi­ciently ex­pe­ri­enced and knowl­edge­able peo­ple,” Lu­cas-Bull said af­ter the com­pany’s an­nual gen­eral meet­ing (AGM) in Jo­han­nes­burg this week.

“All out­sourced ser­vices and in­tel­lec­tual prop­erty – in­clud­ing the brand and IT – are sub­ject to com­mer­cial terms and li­cences, pro­vid­ing ap­pro­pri­ate time frames to put in place al­ter­na­tives,” she added.

Bar­clays plc is sell­ing down its stake in Bar­clays Africa al­most three years af­ter com­bin­ing the for­mer Absa Group with its African units, ex­clud­ing Zim­babwe and Egypt.

The par­ent com­pany re­duced its stake to 50.1%, af­ter it sold a 12.2% stake to a num­ber of in­sti­tu­tions ear­lier this month.

An­a­lysts said that while it was still early to quan­tify the di­rect and in­di­rect costs of the break-up, it was likely that the par­ent com­pany would foot the bill, as it had ini­ti­ated the move.

“There will be a cost, but my sense is that be­cause Bar­clays plc ini­ti­ated the de­merger, there is a strong ar­gu­ment that they carry the cost, or a part of it,” said Greg Saffy, a bank­ing an­a­lyst at Cast Iron Cap­i­tal.

A num­ber of groups have ex­pressed in­ter­est in buy­ing the re­main­ing Bar­clays stake, in­clud­ing a con­sor­tium led by ex-Bar­clays CEO Bob Di­a­mond, the Dubai-based Abraaj Group and Pa­trice Mot­sepe’s African Rain­bow Cap­i­tal. Bar­clays CEO Maria Ramos and Lu­cas-Bull de­clined to com­ment about which ma­jor groups had shown in­ter­est.

Ramos told City Press that how­ever the bid process panned out, Bar­clays would al­ways be a part of Bar­clays Africa. Joint ven­tures and col­lab­o­ra­tion in cor­po­rate and in­vest­ment bank­ing were be­ing ex­plored even as the com­pa­nies dis­en­gaged, she said.

“Bar­clays needs a part­ner in Africa and they have al­ready said that they need to stay con­nected to us ... to de­liver to their global clients in Africa,” Ramos said.

“That is why they want to hold on to what­ever per­cent­age share­hold­ing in our busi­ness [they can], whether as a share­holder or a com­mer­cial part­ner.”

The com­pany was also ex­plor­ing us­ing the planned sale as an op­por­tu­nity to in­crease its black share­hold­ing, Lu­cas-Bull said in re­ply to Mehluli Mn­cube, who was rep­re­sent­ing funds which hold about 4% of Bar­clays Africa, in­clud­ing the Eskom Pen­sion Fund, Sen­tinel Re­tire­ment Fund and Mines Pen­sion Fund.

Mn­cube said he would want to see Bar­clays Africa with more than 10% black own­er­ship.

The bank’s black share­hold­ing dropped af­ter the exit of Tokyo Sexwale’s Batho Bonke Cap­i­tal in 2012.

In re­sponse to City Press’ ques­tions, Bar­clays Africa spokesper­son Bhek­izulu Mpofu main­tained that the bank was com­pli­ant with black em­pow­er­ment leg­is­la­tion and the fi­nan­cial ser­vices sec­tor char­ter, which stip­u­lated 25% BEE own­er­ship at the hold­ing com­pany level, with 10% of that be­ing di­rect own­er­ship. He did not give fig­ures.

Mn­cube queried whether Lu­cas-Bull’s R4.96 mil­lion pay for 2015 would be cut af­ter she stepped down from the Bar­clays plc board in March, calling it “ex­ces­sive”.

Out­go­ing Bar­clays Africa board fi­nance com­mit­tee chair­man Trevor Mun­day de­fended Lu­cas-Bull’s pack­age, say­ing that the group fol­lowed best prac­tice and took ex­ter­nal ad­vice on ex­ec­u­tive pay.

Other share­hold­ers were not happy with the way that Bar­clays Africa’s direc­tors were paid – 18% of the votes cast at the AGM were against the com­pany’s re­mu­ner­a­tion pol­icy.

And Bar­clays Africa nonex­ec­u­tive di­rec­tor Yolanda Cuba, also a for­mer Mve­laphanda Group CEO, felt the wrath of the bank­ing group’s share­hold­ers when about 12% of the votes at the AGM were cast against her re-elec­tion.

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