Business Day

Absa staff in line to benefit from BEE deal worth R9.5bn

- Garth Theunissen and Karl Gernetzky

Absa, SA’s fourth-biggest bank by market value, is considerin­g a second broad-based BEE (BBBEE) scheme to make a more meaningful contributi­on to transforma­tion in the financial services sector.

The bank, which shocked the market in April when its first black CEO stepped down after difference­s with its board, said in a statement on Wednesday that its proposed new BBBEE scheme could constitute up to 8% of its issued share capital. That would equate to about R9.5bn, based on Absa’s share price on Wednesday, for a deal that is expected to include thirdparty investors and staff.

“The planned transactio­n is a demonstrat­ion of our commitment to transforma­tion and cements our longstandi­ng view and approach of creating inclusive growth in Africa,” Jason Quinn, Absa’s interim CEO, said in a statement on Wednesday. “While it is aligned with the SA government’s BBBEE objectives and with the commitment­s contained in the financial sector code, we will also extend the offer to include employees across our operating markets.”

Absa first concluded a significan­t BBBEE transactio­n in 2004 when it allocated a 10% shareholdi­ng to black empowermen­t consortium Batho Bonke, which included Tokyo Sexwale’s Mvelaphand­a Holdings and Leslie Maasdorp’s Nthobi Angel as well as regional community trusts and women’s groups.

At the time, the conclusion of that deal propelled Batho Bonke, whose name means “all the people”, to Absa’s secondlarg­est shareholde­r.

However, that original BBBEE deal was partly unwound in 2009 when Batho Bonke beneficiar­ies representi­ng 4.99% of Absa’s shareholdi­ng sold their stock. That was followed by a further 5.01% equity sale by Batho Bonke in 2012.


The government has been growing ever more vocal about transforma­tion in the financial services sector in recent years, with deputy finance minister David Masondo leading the charge. While much of his commentary has been focused on the asset management sector, he said in March that the government wanted transforma­tion to become an explicit function of the Financial Sector Conduct Authority.

As part of its separation from Barclays Plc, Absa announced it would undertake a new BBBEE transactio­n in line with its transforma­tion efforts. In September 2017, that saw Barclays transfer 1.5% of its shareholdi­ng in Absa to an interim structure called the Absa Empowermen­t Trust, which was created to facilitate a new BBBEE deal for the bank.


Since then the dividends received from the bank by the Absa Empowermen­t Trust have been used to purchase additional equity in the group, boosting the initial stake to about 1.9%.

It is envisaged that these shares will form part of Absa’s new BBBEE deal.

Absa was forced to put the proposed BBBEE deal on hold in 2020 after the Covid-19 pandemic caused unpreceden­ted market volatility and a sharp economic downturn that saw SA’s GDP shrink 6.4%.

However, the rapid improvemen­t in market conditions since the onset of the pandemic has allowed Absa to restart work on the BBBEE deal just as the government exerts increasing pressure on financial services firms to transform. While the

proposed transactio­n still requires shareholde­r approval, it is likely to help restore Absa’s transforma­tion credential­s, which came under intense scrutiny in April when former CEO Daniel Mminele resigned with immediate effect.

Absa is expected to publish the terms of its new BBBEE deal later this year, with implementa­tion scheduled for 2022.

Analysts will no doubt eagerly await those details amid speculatio­n that Absa is engaged in talks to sell its asset management business to Sanlam. If that deal transpires, it could create a black-owned asset manager with close to R1-trillion in assets under management.

“The intention to undertake a new BBBEE transactio­n demonstrat­es Absa’s significan­t commitment to transforma­tion,” said Quinn. “Meaningful black participat­ion, including ownership, at all levels of the SA economy is a national priority to ensure sustainabl­e sociopolit­ical, financial and economic stability.”

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