ABSA is looking into a Black Economic Empowerment plan that could account for up to 8% of the country’s third-largest lender, which is worth R9.6 billion at current market values.
According to a statement issued by the Johannesburg-based bank on Wednesday, the effort is expected to include both international investors and staff (22 September). The plan’s contents will be announced later this year, with implementation scheduled for 2022.
South African organizations are being pushed to create black empowerment plans in order to assure compliance with government legislation aimed at redressing financial inequities that occurred during the apartheid era. Absa’s current trust owns 1.9 percent of the lender.
ABSA contemplated establishing a new program following the exit of former shareholder Barclays, but put it on hold when the coronavirus pandemic struck markets 18 months ago.
ABSA’s shares rose 1.4 percent in early Johannesburg trade, increasing the bank’s year-to-date gains to 19 percent and valuing it at R121 billion.
Although the agreement is still in the works, it is envisaged that it will hold up to 8% of the company’s issued share capital, or R9.4 billion, based on the company’s share price on September 20, 2021, and that it will be broad-based, encompassing both third-party investors and workers.
According to the firm, the staff component would allow all Absa employees to become shareholders and participate in the company’s success throughout the group’s activities.
Absa was the first of South Africa’s major banks to close a large B-BBEE transaction in 2004, when it sold a 10% stake to Batho Bonke Capital.
As a result, the Batho Bonke-led alliance grew to become Absa’s second-largest shareholder. South Africans benefited when the Batho Bonke deal crumbled, allowing donors to sell their shares, ranging from local trusts to women’s groups, BEE companies, stokvels, and employees.