Barclays Africa to reinvent itself -- as new Absa
Brand will reflect ‘African culture’, says CEO Ramos
● After a five-year stint as Barclays Africa, South Africa’s third-largest bank by market capitalisation will again see its brand refashioned.
For South Africans the change will see Absa, once the country’s largest retail bank, restored. But in countries such as Ghana, Kenya and Mauritius, the re-brand draws to a close the almost century-old association with the British bank Barclays.
It’s an undertaking that will not be risk-free.
“The business will need to embark on a possibly costly marketing spree to promote the Absa brand outside of South Africa, especially in countries in the rest of Africa where the bank has a presence but the Absa name is not well known,” said Rahima Cassim, fund manager at Ashburton Investments.
But using the original name was still probably a better bet than bringing something entirely foreign to South Africa, where 80% of the banking group’s business lies, after almost 30 years. Amalgamated Banks of South Africa was established in 1991 when United Bank, the Allied Bank, the Volkskas Bank Group and parts of the Sage Group merged. Later, Trust Bank, Senbank and Bankfin joined, and in 1998 the group began operating under one single brand, Absa.
Now Barclays Africa, which was recently liberated from Barclays plc in a sell-down that has seen the UK bank’s majority shareholding fall to 14.9%, has the opportunity to reinvent itself.
“This is the first time in a generation that we get to stand alone with a different set of shareholders, and that we have our destiny in our own hands,” CEO Maria Ramos said.
The change of the holding company’s name to Absa Group Limited will be presented at its AGM in May for shareholder approval. Ramos hopes that the JSE-listed entity will be trading under its new name by June, though she could not say when the brand’s new look and feel would be launched.
Coy about the new look and feel, which will only be unveiled once the renaming of the group and its African operations receives shareholder and regulatory approval, Ramos disclosed only that the new brand would include something old and something new.
“This is not Absa as we know it. This is a different Absa, something that changes its being from what we know to something which is deeply African and reflects the African culture.”
Part of this new culture places emphasis on entrepreneurial zeal, innovation and free thinking, in contrast to the conservative image the Absa name was once associated with.
Despite the popularity of the Barclays brand in the rest of Africa, brand research commissioned by Barclays Africa, across a sample of 130 000 people, showed that the Absa brand was not unknown on the continent. In Ghana, one of the group’s most promising markets in Africa, there was around 24% awareness of the Absa brand.
In 2015, Absa’s brand equity was worth R33-billion, said Barclays Africa’s Bobby Malabie, group executive: marketing and corporate relations.
With its new name, the group would seek new business opportunities and was investigating the acquisition of a banking licence in Nigeria, Ramos said.
Robert Besseling, executive director at business-risk intelligence firm Exx Africa, said that consolidation of smaller banks in Nigeria and optimism around the oil price had made the country ripe for foreign entrants to the market. “There’s a huge fuss about some economies coming from a low base and growing at record global levels, such as Ethiopia, Ivory Coast and Tanzania. These are relatively small economies but their growth rates are stellar on a world scale,” he said.
“However, the political risk in many of these is growing. So we are going to see a redistribution of interest to some of the larger economies that are coming out of recession, like Nigeria.”
But Patrice Rassou, head of equities at Sanlam Investment Management, believes the group should rather focus on growth in South Africa and its other existing geographies, after its retail bank lost market share.
“They have gone through a rough patch so there are signs that things are starting to turn the corner . . . the problem with a lot of African businesses is that you tend to have fairly decent and profitable corporate and investment banking businesses in the region, but not sizeable retail businesses.
“You need to be quite in tune with your local market to do well there . . . [so Barclays Africa] needs to approach the market quite differently.”
On Thursday, the group reported 4% growth in headline earnings.
Its income increased 1% to R72.9billion. Return on equity decreased from 16.6% to 16.4%.