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Absa Implements one of the Largest B-BBEE Transactions

19 September 2023

What it means for Absa, beyond B-BBEE

Author: Arrie Rautenbach, Absa Group CEO

As a bank, we constantly strive to play our part unlocking the significant economic potential of the African continent by being an active force for good in everything we do. The implementation of our Broad-Based Black Economic Empowerment (B-BBEE) transaction on 1 September is a powerful affirmation of this commitment, as we build a diverse and inclusive organisation, not only in South Africa, but also our operations across the continent.

The transaction, which has been in the making for some time, is one of the largest B-BBEE transactions to be implemented in recent times. It is significant numerous ways, not only as it should enable us to sustainably exceed the ownership threshold set out in the Financial Sector Charter, but also because it will have a meaningful positive impact for the two beneficiary groups, being our employees and beneficiaries of the Corporate Social Investment (CSI) Trust.

The transaction is significant also as it is launched at the right time. Having refined our Group strategy, operating model and corporate purpose commitment over the past two years, we are building momentum in the work we are undertaking collectively to enhance our culture across the Group. The sense of progress and a clear path ahead have seen employee engagement rise to levels not seen before.

Our B-BBEE transaction will embed a broad ownership culture across the business, and this will further bolster the effort to achieve the culture shift that will allow us to drive better outcomes, for the Group, for our customers and for our shareholders too.

The transaction involves 7% of the enlarged Absa Group shares in issue, comprising 3% for employees in South Africa and 4% for participants in a CSI Trust. A cash-equivalent component for our employees in the 14 other countries where we have a presence will be implemented, subject to local approvals.

The transaction design is firmly rooted in the principles of diversity and inclusivity as we sought to recognise the contribution that every one of our employees makes to the success of the Group. While no one is excluded, those who were most disadvantaged in the past, will receive the biggest benefit.

The evergreen CSI Trust will operate for the benefit of a broad range of beneficiaries from previously disadvantaged communities across South Africa. The CSI participants will be selected by the trustees and reviewed annually. The CSI Trust will focus on education and youth employability.

Importantly, we structured the deal in such a way as to enable free participation by employees and beneficiaries of the CSI Trust. This is in line with our social commitment to ensure that stakeholders are not excluded due to financial constraints. Our B-BBEE transaction has been designed in such a way that there is only upside for the beneficiaries, and no personal financial risk.

An important feature of this transaction is that economic benefits will be timeous and tangible for our CSI beneficiaries. We were deliberate in avoiding a transaction with extended lock-in periods and long waiting periods for dividends to cover funding commitments.

In keeping with our commitment to being a purpose-led organisation, it gave us great pleasure to launch a transaction that will enable our employees and communities to participate in Absa’s growth across Africa. This is aligned to our commitment to being an active force for good, promoting transformation, diversity and inclusion.

19 September 2023

What it means for Absa, beyond B-BBEE

Author: Arrie Rautenbach, Absa Group CEO

As a bank, we constantly strive to play our part unlocking the significant economic potential of the African continent by being an active force for good in everything we do. The implementation of our Broad-Based Black Economic Empowerment (B-BBEE) transaction on 1 September is a powerful affirmation of this commitment, as we build a diverse and inclusive organisation, not only in South Africa, but also our operations across the continent.

The transaction, which has been in the making for some time, is one of the largest B-BBEE transactions to be implemented in recent times. It is significant numerous ways, not only as it should enable us to sustainably exceed the ownership threshold set out in the Financial Sector Charter, but also because it will have a meaningful positive impact for the two beneficiary groups, being our employees and beneficiaries of the Corporate Social Investment (CSI) Trust.

The transaction is significant also as it is launched at the right time. Having refined our Group strategy, operating model and corporate purpose commitment over the past two years, we are building momentum in the work we are undertaking collectively to enhance our culture across the Group. The sense of progress and a clear path ahead have seen employee engagement rise to levels not seen before.

Our B-BBEE transaction will embed a broad ownership culture across the business, and this will further bolster the effort to achieve the culture shift that will allow us to drive better outcomes, for the Group, for our customers and for our shareholders too.

The transaction involves 7% of the enlarged Absa Group shares in issue, comprising 3% for employees in South Africa and 4% for participants in a CSI Trust. A cash-equivalent component for our employees in the 14 other countries where we have a presence will be implemented, subject to local approvals.

The transaction design is firmly rooted in the principles of diversity and inclusivity as we sought to recognise the contribution that every one of our employees makes to the success of the Group. While no one is excluded, those who were most disadvantaged in the past, will receive the biggest benefit.

The evergreen CSI Trust will operate for the benefit of a broad range of beneficiaries from previously disadvantaged communities across South Africa. The CSI participants will be selected by the trustees and reviewed annually. The CSI Trust will focus on education and youth employability.

Importantly, we structured the deal in such a way as to enable free participation by employees and beneficiaries of the CSI Trust. This is in line with our social commitment to ensure that stakeholders are not excluded due to financial constraints. Our B-BBEE transaction has been designed in such a way that there is only upside for the beneficiaries, and no personal financial risk.

An important feature of this transaction is that economic benefits will be timeous and tangible for our CSI beneficiaries. We were deliberate in avoiding a transaction with extended lock-in periods and long waiting periods for dividends to cover funding commitments.

In keeping with our commitment to being a purpose-led organisation, it gave us great pleasure to launch a transaction that will enable our employees and communities to participate in Absa’s growth across Africa. This is aligned to our commitment to being an active force for good, promoting transformation, diversity and inclusion.