Absa finalises R11.2bn empowerment deal

Banking group Absa has finalised a R11.2 billion empowerment deal that will see 7% of its shares in the hands of its black employees.

Absa’s empowerment deal

The bank said that after the transaction, which remains subject to shareholder approval and effectively increases black ownership, Absa’s black ownership will exceed the 25% threshold set out in the Financial Sector Charter.

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“Notwithstanding Absa’s current Level 1 broad-based black economic empowerment (B-BBEE) rating, Absa’s current Black equity ownership per the B-BBEE scorecard in respect of the 2022 financial year is 17.44%. Following the implementation of the proposed B-BBEE transaction, Absa expects to increase its Black equity ownership to be sustainably above 25%,” Absa said.

Diversity and inclusion

Arrie Rautenbach, Absa group CEO, said the deal firmly demonstrates the bank’s commitment to broad-based black economic empowerment, which is critical in fostering a diverse and inclusive South African organisation.

“The transaction is the next big step in our broader transformation journey and, at the same time, recognises the role that our staff and communities play by giving them the opportunity to benefit from the value generated by the group,” Rautenbach said.

Empowering communities

The transaction comprises a Corporate Social Investment (CSI) trust which will also benefit black communities who will indirectly own a 4% shareholding. A staff trust will indirectly hold 3% of the Absa Group, collectively constituting the 7% representing Absa’s group shareholding, the bank said.

A further equivalent of approximately 1% of Absa’s group shareholding will be made available to staff employed by subsidiaries in other markets, it added.

“Although primarily designed to achieve our black economic empowerment and transformation objectives, it was also important for us to ensure that a portion of the benefit will be used to empower communities through education and youth employability initiatives,” said Rautenbach.

He further said the deal signals a substantial milestone in the company’s efforts to empower communities.

“We believe that staff will also be incentivised in a way that promotes engagement and our espoused culture objectives,” he said.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.

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