Spending on IT at Absa parent Barclays Africa Group spiked by 17% to reach R7,4bn in the 2016 financial year ended 31 December, accounting for 19% of group costs. And the figure is set to rise further still.
Barclays Africa Group said on Thursday that it will receive billions of rand in support from parent Barclays as the British banking giant prepares to reduce its shareholding and separate from the JSE-listed financial services group.
In terms of the separation plan, Barclays has agreed to contribute £765m, or about R12,3bn, “primarily in recognition of the investments required” for a successful divorce.
And the bulk of that money — £515m, or R8,3bn — is for “investments required in technology, rebranding and other separation projects”, Barclays Africa Group said in a statement to shareholders.
A further £55m (R886m) has been allocated to cover separation-related expenses, of which £27,5m was received in December 2016. Another £195m (R3,1bn) has been allocated to terminate the existing service-level agreement between Barclays and Barclays Africa Group relating to the “rest of Africa” operations acquired in 2013.
Barclays announced its intention to reduce its shareholding in the local business back in March 2016. It has now submitted an application to the South African Reserve Bank for approval to reduce its shareholding in the group to below 50%.
“The application, which also requires the approval of the minister of finance, based on the advice from the Registrar of Banks, includes the terms of the separation payments and transitional services arrangements…”
As part of the agreed terms, from the date on which Barclays reduces its shareholding to below 50%, Barclays Africa Group can continue to use the Barclays brand in the rest of Africa for three years and will receive certain services from Barclays on an arm’s length basis for up to three years. — (c) 2017 NewsCentral Media