BARCLAYS AFRICA GROUP LIMITED - Barclays Africa/ABSA Bank - Update on Barclays Plc sell-down and separation

Barclays Africa/ABSA Bank - Update on Barclays Plc sell-down and separation

BARCLAYS AFRICA GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 1986/003934/06
ISIN: ZAE000174124
JSE share code: BGA
(Barclays Africa Group, BAGL or the Group)


ABSA BANK LIMITED
Authorised financial services and registered credit provider (NCRCP7)
Incorporated in the Republic of South Africa
Registration number: 1986/004794/06
ISIN: ZAE000079810
JSE share code: ABSP
 (Absa Bank)


UPDATE ON BARCLAYS PLC SELL-DOWN AND SEPARATION

Since 1 March 2016, when Barclays PLC announced its intention to reduce its shareholding in
BAGL to achieve accounting and regulatory deconsolidation, we have worked jointly to ensure
the best outcome for all of our stakeholders.

Shareholders are advised that Barclays PLC has submitted an application to the South African
Reserve Bank for approval to reduce its shareholding in the Group to below 50%. The
application, which also requires the approval of the Minister of Finance, based on the advice
from the Registrar of Banks, includes the terms of the separation payments and transitional
services arrangements, which have been agreed between Barclays PLC and BAGL.

The agreed terms provide for contributions by Barclays PLC to BAGL totaling £765 million
(ZAR12.8 billion) (see note 1), primarily in recognition of the investments required for the Group
to separate from Barclays PLC. These contributions, comprise:
    - £515 million (ZAR8.6 billion) (see note 1) in recognition of the investments required in
       technology, rebranding and other separation projects;
    - £55 million (ZAR0.9 billion) (see note 1) to cover separation related expenses, of which
       £27.5 million was received in December 2016; and
    - £195 million (ZAR3.3 billion) (see note 1) to terminate the existing service level
       agreement between Barclays and BAGL, relating to the Rest of Africa operations
       acquired in 2013.

As part of the agreed terms, from the date on which Barclays PLC reduces its shareholding in
BAGL to below 50%:
   - BAGL can continue to use the Barclays brand in the rest of Africa for three years; and
   - BAGL will receive certain services from Barclays on an arms’ length basis for a
       transitional period, typically up to three years.

The expectation is that the financial contributions will neutralize the capital and cash flow impact
of separation investments on the Group over time. However, the separation process will have
an impact on BAGL’s financial statements for the next few years, most notably by increasing the
capital base in the near-term and generating endowment revenue thereon, with increased costs
likely over time as the separation investments are concluded. Consequently, BAGL will start to
report normalized results that better reflect the underlying performance of the Group once the
contributions have been received.

In addition, Barclays PLC has agreed to contribute an amount equivalent to 1.5% of BAGL’s
market capitalization (ZAR2.1 billion) (see note 2) towards the establishment of a larger broad-
based black economic empowerment scheme. Further details on this will be communicated in
due course.

Notes

(1) Sterling amounts converted to ZAR at 16.78, which was the closing rate on 31 December
    2016

(2) Based on a BAGL share price of ZAR168.69, which was the closing price on 31 December
    2016



Johannesburg
23 February 2017


Enquiries:
Alan Hartdegen
+27 (0) 11 350 2598
E-mail: Alan.Hartdegen@barclaysafrica.com

Lead Independent Sponsor to Barclays Africa Group:
J.P. Morgan Equities South Africa Proprietary Limited

Joint Sponsor to Barclays Africa Group:
Corporate and Investment Bank – a division of Absa Bank Limited

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