Separation programme timelineDownload the Separation programme timeline (PDF)
Separation programme update
On 1 March 2016, Barclays PLC announced its decision to divest from Barclays Africa to a level that would achieve regulatory and accounting deconsolidation. It set a time frame of approximately three years to execute on its intention. It reduced its shareholding to 14.9% by December 2017 through two bookbuilds and a contribution to a future broad-based black economic empowerment structure. The second bookbuild placed 33.7% of Barclays Africa shares. At R38bn, it is the largest bookbuild ever in South Africa and investors who participated have experienced total returns of about 60% in nine months.
Day 1 for the Separation was in June 2017, when our legal Separation Agreements with Barclays PLC took effect. However, significant planning and preparations prior to this laid the foundation for the execution of Separation activities. Early in 2017, the full portfolio of work required to deliver the successful decoupling was scoped. Various impact and risk assessments were also conducted to assess the financial risk and delivery risks associated with each underlying project.
There are three main agreements:
- a Separation Agreement, which sets out the terms and related payments;
- a Transitional Services Agreement, which commits Barclays PLC to continue providing services, such as technology, to us until we replace them over a period of three years; and
- an agreement stipulating how we can use the Barclays brand until 2020 in the Rest of Africa and the terms for removing ‘Member of Barclays’ in South Africa by June 2018.
Given its size and complexity, we put a robust governance structure in place, which is overseen by a dedicated Board committee – the Separation Oversight Committee – with aspects of the Separation being considered at the Board and various other Board committees. Management governance includes the Barclays Africa Group Change Committee and Barclays Africa Change working group. We also set up a joint governance framework with Barclays PLC in 2016. A key component of this is the Joint Transition Forum, which continues to meet monthly and comprises of three Executive committee members from each organisation. We engaged external advice, with Accenture assisting with strategic planning and advisory support while PwC and internal audit provides independent quality assurance to the Board.
Continuous regulator engagements
Regulatory engagement is a critical element of separating and we have intensified our efforts to maintain continuous dialogue with regulators given that we are systemically important in all of the countries in which we operate. We have intensified our efforts across the continent to meet with our regulators on an ongoing basis. Engagement platforms include an ‘Africa Supervisory College’ that represents the collective of key regulators across the continent. Going forward, supported by the majority of our regulators, we will host monthly technical working group sessions to facilitate detailed discussion between in-country teams and in-country regulatory teams, to cover operational and technical questions pertaining to the Separation activities in each country.
The journey to obtain approval from the Prudential Regulatory Authority for full regulatory deconsolidation from Barclays PLC is underway. In support of the overall process, Barclays PLC engaged with its key regulators, and obtained (with the brand change being a key step) permission for partial regulatory deconsolidation in July 2017 and engagements are now focused on progressing to full deconsolidation.
Delivered by an experienced and dedicated team
The effort required to deliver the Separation is almost double the typical business-as-usual change, with a complex, critical path of projects with significant interdependencies, placing pressure on our delivery capacity. We set up a dedicated operational Separation team and each business unit has a dedicated change lead responsible for Separation, enabling teams to identify and solve for dependencies and constraints that cut across business units.
We have about 360 people spending more than 70% of their time on separation. Around 200 are information technology specialists and 80 are from Corporate and Investment Bank, with the remainder focused on rebranding and other functions. The core team has been co-located since July 2017, to improve collaboration, decision making and communication between teams.
With robust risk management and mitigation
The Separation has elevated the Group’s risk profile and a risk management framework and a range of mitigation actions are in place to ensure that we manage our execution risk:
- The Transitional Services Agreement allows us to manage the phasing and delivery of projects. To replace systems, services and processes, we will use a combination of solutions including buy, build or ‘lift and drop’, where we migrate existing infrastructure from Barclays PLC.
- People capacity is one of the largest risks we are managing, particularly since the project plan involves tight timelines.
- A transition office proactively manages risk by identifying and resolving interdependencies between projects, technology, people and processes.
- Lastly, we undertake detailed internal and independent quality assessments to enhance confidence levels, as part of a combined assurance model.
Three key areas of change
Operational separation involves three key elements:
- ‘Touch points’
- A new strategy to take us forward
- A decision on what our brand is to be, and how we implement that decision across our markets.
Over two thousand dependencies need to be ‘de-coupled’, including approximately 600 systems and applications, 284 policies and frameworks, and more than 150 vendor relationships. Our Separation ‘book of work’ is a portfolio of about 300 projects. The Transitional Services Agreement secures services from Barclays PLC for 36 months and covers 129 material services.
Our plan takes a structured approach, aiming to match the delivery of the projects to the term of the Transitional Services Agreement. This provides sufficient time to complete the majority of the projects in the book of work. At the end of February 2018, 20 projects have successfully been delivered and seven material services previously provided by Barclays PLC have been successfully terminated. Some of our most important projects, includes:
Key to ensuring effective delivery is building out our standalone functions, taking full control of our critical functions, capabilities and services within the first half of 2018. Critical functions receiving focus are finance, internal audit, risk, human resources, financial crime and compliance, technology and converged security.
Our One Africa strategy formed part of the broader, global strategy of Barclays PLC and the Separation has provided us with an opportunity to redefine our purpose, set a new business strategy and deliver a new brand that represents our values and aspirations. Our #ExpressYourself journey included broad employee engagement founded on the principles of co-creation and transparency. This collaboration was the starting point of a new approach which is characterised by greater personal and business accountability and the desire to create a thriving organisation.
Our ambition is to grow and be a financial services group that Africa can be proud of, with our employees and organisational culture at the centre. We unpack our new strategy over the following pages.
This aspect has two components:
(i) removing ‘a Member of Barclays’ from Absa branded items.
(ii) the Group’s re-branding journey.
In terms of the removal of ‘a Member of Barclays’, good progress has been made ahead of the contractual delivery date of 6 June 2018. In December 2017, after many months of research and more than 130 000 engagements with stakeholders in each of our operating countries, our Board approved a new brand strategy. Barclays Africa Group Limited will become Absa Group Limited (subject to shareholder and regulatory approval) and our operations across Africa will be launched, re-presented as Absa with an identity fit for the modern, new and forward-looking businesses we are creating. The approval of regulators in each of our markets is required to change the name and trading brand for each of our businesses outside of South Africa.