Absa is in receipt of and notes the Public Protector’s Provisional Report. As this is a confidential provisional document released to a limited number of parties for comment and further input, it may change materially following further submissions.

We have fully cooperated with the Public Protector’s investigation since it began and we will continue to do so. Following an interview with senior executives of Absa in June 2016, the Public Protector accepted our written offer for her to inspect confidential documents in our possession that are very pertinent to the successful finalisation of the investigation. The Public Protector accepted this offer in writing but never actually took it up. This offer remains open.

These documents pertain to, among others, due diligence performed by Absa prior to acquiring Bankorp. Bankorp started receiving SA Reserve Bank assistance in 1985. Absa acquired Bankorp in April 1992 at fair value. All the obligations pertaining to the SA Reserve Bank’s assistance were discharged in full by October 1995.

We have written to the Public Protector informing her that we accept her invitation to make further submissions in terms of the Public Protector Act. These submissions will correct several factual and legal inaccuracies that are contained in the Provisional Report. This will be done on or before the deadline of 28 February 2017.

Davis Panel of Experts

It is regrettable that the Public Protector’s Report has been leaked before further submissions and finalisation because in its current form it perpetuates an incorrect view that Absa Bank Ltd was the beneficiary of undue SA Reserve Bank assistance.

The Davis Panel of Experts appointed by former SARB Governor, Mr Tito Mboweni found that that Absa’s shareholders did not derive any undue benefit from the SARB’s intervention and as such no claim of restitution could be pursued against Absa. We emphatically agree with this position and attach the full Executive Summary of the Davis Panel Report for reference. The full Davis Panel Report can be accessed on:

http://www.gov.za/sites/www.gov.za/files/gov_panelexperts_bankorp_0.pdf

It must be noted that the matters and events under investigation occurred during the period 1985 to 1995, 21 to 31 years ago. The testimony provided by current Absa senior executives to the Public Protector was based on records available to the bank’s current management as none of them have personal knowledge of events at the time.

In order to provide the Public Protector with the space she requires to complete her final report we do not intend to provide running public commentary on the Provisional Report until it has been finalised and published.

The seasonally adjusted Barclays Purchasing Managers’ Index (PMI) declined to 46.7 index points in December 2016 from 48.3 in November. This means that the manufacturing PMI remained stuck below the neutral 50-point for a fifth straight month. This is in stark contrast to the sustained upward momentum seen in global PMI figures since mid-2016. In the US and the Eurozone, manufacturing PMI readings came in above 54 index points in December. The most recent Chinese PMIs are also pointing to accelerating output growth.

In all likelihood, the key reason why the South African manufacturing sector is underperforming is the persisting weakness of domestic demand. Key supply constraints (most notably load-shedding and strike activity) actually moderated through 2016. A recovery in agricultural output and an uptick in the mining sector on the back of higher commodity prices could support demand going forward. However, this could be offset by the outlook for the local consumer which is more downbeat. On a positive note, the uptick in global industrial activity could benefit local manufacturers targeting the export market in coming months.

Four of the five major subcomponents of the PMI remained below 50 points in December. Most notably, the index measuring suppliers’ performance slumped to a historic low of 40.9 from 48 index points in November. This reflected the broad-based weakness of the domestic economy as it implies that suppliers are operating way below capacity.

The business activity index fell by 2.6 points to 46.3 in December – the sixth straight month that the index reflects a decline in output. Encouragingly, the new sales orders index managed to stay just above 50 in December (50.9), likely lifted by continued export orders. The inventories index declined for a third month, keeping it well below the new sales orders index.

This meant that the PMI leading indicator remained above 1, suggesting that output growth could pick up as demand outstrips inventories. Manufacturers were also relatively optimistic about expected business conditions in six months’ time, albeit that the index fell slightly from 53.9 to 53.2 in December.

The purchasing price index remained unchanged at 65.6 index points in December. While the rand exchange rate was slightly stronger compared to November, this was countered by a sharp rise in the Brent crude oil price.

Starting with the release of the January 2017 PMI, the name of the index will change from the Barclays PMI to the Absa PMI.

Barclays Africa Group today announced that it has agreed terms for operational separation with UK-based Barclays PLC, which is reducing its shareholding in Barclays Africa. The agreement is expected to unlock opportunities for Barclays Africa as an independent pan African bank.

“It is a good outcome that enables us to complete the separation, and to provide continuity and improved service for our customers,” said Maria Ramos, Chief Executive, Barclays Africa.

UK-based Barclays PLC announced on 1 March 2016 that it intends to sell the majority of its shareholding in Barclays Africa over a period of two to three years. Since then, Barclays PLC and Barclays Africa Group have worked jointly to ensure the best outcome for all of our stakeholders.

Barclays PLC has submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50%. The application, which also requires the approval of the Minister of Finance, includes the terms of the separation payments and transitional services arrangements, which have been agreed between Barclays PLC and Barclays Africa.

The agreement provides for contributions by Barclays PLC totalling GBP765 million (R12.8 billion based on 31 Dec 2016 exchange rate) primarily to fund the investments required for Barclays Africa Group to separate from Barclays PLC as follows:

• £515 million (R8.6 billion) for investments required in technology, rebranding and other separation projects;
• £55 million (R0.9 billion) to cover separation related expenses, of which £27.5 million was received in December 2016; and
• £195 million (R3.3 billion) to terminate the existing service level agreement between Barclays and BAGL, relating to the Rest of Africa operations acquired in 2013.

The expectation is that the financial contributions will neutralise the capital and cash flow impact of separation investments on the Group over time.

Barclays PLC currently owns 50.1% of Barclays Africa. Following the reduction of Barclays PLC’s shareholding below the 50% mark, Barclays Africa will be able to continue using the Barclays brand at its operations outside of South Africa for three years. Barclays Africa will receive certain services from Barclays PLC on arms’ length basis for a transitional period, typically up to three years.

An important feature of discussions has been the provision for a broad-based black economic empowerment scheme. While the full details are still under consideration, we are pleased to announce that Barclays PLC has agreed to contribute an amount equivalent to 1.5% of Barclays Africa’s market capitalisation, or R2.1 billion (based on a Barclays Africa’s share price of R168.69 on 31 December 2016) towards the establishment of such a scheme.

“Separation has a number of implications for our business,” said Ramos. “It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation.”

Alongside a black economic empowerment scheme, Barclays Africa also wants to create an equity proposition for our staff in the next 12 to 18 months. This will give our people the opportunity to benefit from share ownership, and to share in the future growth of our business.

“Both these schemes will help us to build an ownership-based, entrepreneurial culture that goes to the heart of our commitment to the communities which we serve,” Ramos said.

We remain firmly focused on building a leading standalone Pan African financial institution.

Barclays Africa Group is pleased to announce the appointment of new agencies to handle its significant business across the continent. Specifically, FCB Africa will handle its corporate, brand, sponsorship, retail and insurance advertising portfolios, and Mortimer Harvey will handle its business to business advertising portfolio.

Barclays Africa offers a full and integrated range of products and services to more than 12 million customers in 12 countries across Africa. We have a strong franchise with assets of over R1 trillion, and are deeply committed to the success of our continent. Partnering with these two renowned agencies, FCB Africa and Mortimer Harvey, is a key step on our journey.

A continent-wide strategic evaluation of over 50 top agencies in Africa informed our decision, overseen by Yardstick who are an independent firm specialising in the provision of measurement and assurance services to the advertising industry. The review included a rigorous internal and external governance process.

Commitment to Africa

Group Executive, Marketing and Corporate Relations, Bobby Malabie, said: “As we continue to focus our business and commitment to Africa, the evolution to a new agency model is critical. Both FCB Africa and Mortimer Harvey demonstrated an impressive understanding of our business requirements and are committed to building a market leading partnership model with us. FCB Africa and Mortimer Harvey boast enviable credentials and awards, and we look forward to building on these together”

“We also saw this as an opportunity to drive a greater focus on transformation in the advertising industry, and our new agencies, FCB Africa and Mortimer Harvey, have demonstrated their commitment in this area. We look forward to engaging further with the broader advertising industry on some of our more specialist requirements to further improve transformation within the industry” he added.

Barclays Africa would also like to thank its incumbent agencies for the long standing and highly valued relationships. Over the last decade the partnerships have achieved both business and creative success.

The seasonally adjusted Barclays Purchasing Managers’ Index (PMI) reversed October’s loss and rose by 2.4 points to 48.3 index points in November. Despite the uptick, this was the fourth straight month that the index stayed below the neutral 50-point mark, suggesting that factory sector output growth remains under pressure.

In addition, the average for the first two months of the fourth quarter is 1.8 points below that of the third quarter. In the absence of official data for the fourth quarter, the PMI suggests that output is likely to remain subdued after a 1.3% quarter-on-quarter contraction in manufacturing production in the third quarter.

Two of the key subcomponents of the headline PMI showed an encouraging improvement in November. Most notable is the 6.9-point increase in the new sales orders index to 51.4 index points. Higher export orders likely drove this improvement with local (consumer) demand remaining under pressure. Increased orders helped lift the business activity index to 48.9 index points in November, up from 43.5 in October.

Despite the improvement, the business activity index has now been below 50 for five straight months. Also lingering below 50 points is the inventory index which fell by a further 2 points to 45.2 in November.

On a positive note, this means that the new sales orders index outstripped the inventories index, resulting in the PMI leading indicator edging above 1 – this usually bodes well for production going forward. Overall, purchasing managers were also slightly more upbeat about business conditions during the first half of 2017. The index measuring expected business conditions in six months’ time rose by 3.3 points to 53.9 in November after plunging by 13.2 points in the previous month.

After moving lower for four consecutive months, the price index reversed the trend and rose to 65.6 points in November, up from 59.4 in October. The increase was likely driven by the hefty fuel price hike at the start of November, but the expected fuel price decline in December could alleviate some of the upward pressure on costs

The seasonally adjusted Barclays Purchasing Managers’ Index (PMI) declined by 6.2 index points to reach 46.3 in August 2016. The magnitude of the drop was somewhat surprising after the PMI managed to remain above the neutral 50-point mark during the preceding five months. The decline was driven by a steep fall in the new sales orders index and a second straight monthly decline in the business activity index.

Both of these indices are now well below the neutral 50-point mark. However, the majority of respondents indicated that sales orders and output levels were unchanged compared to the previous month rather than down. This suggests that activity may be largely flat compared to July instead of sharply lower.

Despite the big drop in the headline PMI, there were some encouraging signs that the deterioration may have been temporary. The employment index remained just above 50, which could suggest that purchasing managers expect activity to pick up again and in anticipation kept employment levels steady. Indeed, purchasing managers were the most optimistic about expected business conditions in about a year. The index measuring expected business conditions in six months’ time rose to 61.5 index points from 55.4 previously.

The second consecutive decline in the price index was likely also welcomed by manufacturers. The stronger rand exchange rate (in the first three weeks of the month) and the hefty fuel price decline at the start of the month likely contributed to slower cost increases. However, renewed rand weakness in the final week of August (if sustained) means that upward cost pressure could return in coming months.

• Matlare becomes an Executive Director to drive rest of Africa growth strategy
• David Hodnett continues as Financial Director and Deputy Chief Executive Officer with responsibility for SA banking business.
• Stephen van Coller, CEO of Corporate and Investment Bank to retire from banking effective 30 September 2016.

Barclays Africa Group Ltd (BAGL) is pleased to announce the appointment of Peter Matlare as Deputy Chief Executive Officer with responsibility for our rest of Africa banking operations with effect from 1 August 2016. He will remain on the Board but change from non-executive to executive director.

The appointment of a Deputy CEO and Executive Director to oversee the rest of Africa business underscores Barclays Africa’s strategy to grow across all its markets in Africa.

Group Chief Executive Officer, Maria Ramos commented: “Peter is a seasoned executive that brings a wealth of skills and leadership experience across multiple industries. He knows our business intimately having served as an independent non-executive director since 2011. We look forward to his contribution as we continue to pursue our growth strategy in markets across the continent.”

“Barclays Africa is a robust business with excellent growth opportunities on the African continent. I am delighted to join a team that has delivered sustainable and strong returns for shareholders on the back of a sound and differentiated strategy, and I look forward to contributing to its success in a new role on the Executive Committee,” said Matlare.

The responsibility for rest of Africa previously fell under the portfolio of David Hodnett, the Deputy Chief Executive Officer and Financial Director of BAGL.

David Hodnett shall continue as Financial Director and Deputy Chief Executive Officer of BAGL, but with responsibility for the South African [banking] businesses, which make up a substantial part of Barclays Africa. This includes Retail and Business Banking and the Corporate and Investment Bank. “David Hodnett’s appointment is critical to growing our SA business, which remains our base and the biggest component of BAGL. As an Executive Director on our Board he will continue to play a key role in driving our growth strategy,” Ramos commented.

Craig Bond will continue in his role as chief executive of the retail and business bank (RBB) and a member of the Barclays Africa executive committee.

Stephen Van Coller, CEO of Barclays Africa Corporate and Investment Bank, will retire from banking with effect from 30 September 2016.

“Stephen has been a key driver of change in the BAGL business. He has been instrumental in the growth of our corporate and investment banking business and has been at the heart of our Shared Growth strategy spanning education and skills training, enterprise development and financial inclusion – which is being launched next week. I am very grateful to him for his dedication and contribution. All of us at Barclays Africa wish him all the best in his future endeavours,” said Ramos.

The seasonally adjusted Barclays Purchasing Managers’ Index (PMI) rose to 53.7 index points in June, up from 51.9 in May. The PMI has now remained above the neutral 50-point mark for four consecutive months. This is an encouraging sign that conditions in the factory sector may be improving after a lacklustre 2015 and slow start to 2016.

The solid performance of the PMI was supported by all five major subcomponents coming in above 50 points. Stronger demand, according to some respondents driven by improved exports, helped lift production higher. As a result, the new sales orders and business activity indices rose to just above 54 index points. However, it remains to be seen whether this will be sustained.

Domestic demand remains weak and exports could come under renewed pressure due to weaker UK and Eurozone growth in a post-Brexit world. A few respondents indicated that demand was supported by clients stocking up in anticipation of possible supply disruptions if upcoming wage negotiations in the automotive sector result in labour unrest in the third quarter. This suggests that any improvement in domestic demand may have been temporary. Increased stock levels were also seen in the PMI. The inventories index rose to 57 from 51.5 previously. The current level is the highest in almost a year.

The price index ticked up for a second straight month to 81.4 points from 80.1 previously. Despite the recent upward move, the average for the second quarter is more than 8 points below the first-quarter average. This corresponds to the official Producer Price Index which also suggests a slight moderation in final manufactured goods’ inflation in the second quarter. Through the remainder of the year, upward price pressure could intensify as a sustained weak rand and higher electricity and fuel prices push up manufacturers’ costs.

This may have contributed to purchasing managers being less upbeat about expected business conditions in six months’ time. This index fell to 52.9 from 54.1 in May – thereby still suggesting that conditions are expected to improve going forward. However, high inventory levels (compared to new sales orders) pushed the PMI leading indicator back below 1 for the first time since January 2016. This usually does not bode well for production growth going forward as inventories outstrip demand.

Barclays Plc has announced today details of the sale of the first tranche of its shares in Barclays Africa Group Limited

The shares were sold to a mix of existing and new investors. A total of 103,592,491 ordinary shares were sold at a price of ZAR 13,053 million, reducing the Barclays PLC stake in BAGL to 50.1%.

Completion of this transaction demonstrates a healthy investor appetite for BAGL, with the book covered multiple times.

Further details concerning the sale can be found in the accompanying RNS issued to the London Stock Exchange by Barclays Plc and SENS announcement issued by Barclays Africa Group Limited.

Artificial intelligence enabled bots to answer simple customer questions quickly

Barclays Africa Group Ltd’s (Barclays Africa) subsidiary Absa Bank Ltd (Absa) announced today that it would pilot a chatbot within the coming few weeks, making it the first bank to do so in Africa. Chatbots use artificial intelligence to simulate intelligent conversation through written or spoken text.

Yasaman Hadjibashi, Chief Data Officer at Barclays Africa, explains: “At Absa, we are constantly seeking new ways to be more relevant to our customers. By aligning our user-centric and big data expertise we are able to connect with our customers through channels that they are actively using.”

The fact that messaging apps continue to eclipse social media (as the conversational channel of choice in monthly active users) means that consumers are quickly adopting ‘smart’ two-way messaging apps as opposed to traditional, and more limited options such as SMS or email.
According to Jan Moganwa, Chief Executive of Personal & Business Customer Solutions at Barclays Africa, artificial intelligence enabled chatbots can answer simple customer questions quickly, freeing up staff to focus on more complex customer issues that require deeper human insight.

“Connecting with our customers is core to our business. Introducing chatbots at Absa provides greater ability to have relevant conversations with our customers, and provide immediate response,” says Moganwa.

The trial of the chatbots not only marks a transformation in the way the bank will engage with customers, but further underscores its efforts to become the most intelligent bank.

“Using artificial intelligence, the bank can learn what individual customers regularly ask for, in real-time, and make these options easier to find for the customer,” adds Anna Nascimento, Head of Commercial Engagement, Personal Bank at Barclays Africa.