L-R: Barclays Kenya head of strategy Moses Muthui, Jeremy Awori, Managing Director Barclays Bank and CFO Yusuf Omari during the bank's FY results release at the Villa Rosa Kempinski on March 11, 2019. PHOTO | DIANA NGILA | NMG
The bank will spend heavily on advertising, rebranding ATMs, cards and branches to Absa brand.
Ahead of the June 2020 separation deadline, the bank is incurring the cost of rebranding its 212 ATMs, 85 branches and five head office premises besides issuing its customers with Absa-endorsed debit and credit cards.
The lender had already spent Sh387 million in this process in the year ended December, according to its latest annual report.
Barclays Bank of Kenya #ticker:BBK is set to spend billions of shillings to rebrand and refit its IT systems as part of its separation from London-based Barclays Plc, a move that will hit its earnings in the short-term.
The changes were sparked by the UK multinational’s move to reduce its stake to 14.9 percent in South Africa’s Absa Group, its former subsidiary through which it owned the Kenyan bank and nine others in the continent, including in Botswana, Ghana, Uganda and Zambia.
All the institutions are now taking on the Absa brand and cutting their ties with Barclays Plc which provided them with technical and software support, among other back office operations.
“The separation costs will run into billions of shillings over the two to three years. The bank will spend heavily on advertising, rebranding ATMs, cards and branches to Absa brand. We will also buy new IT hardware and upgrade our software,” said Yusuf Omari, Barclays Kenya’s chief financial officer.
“We will provide normalised financial results to adjust for the consequences of the separation, to better reflect our underlying performance, and to inform our capital and dividend decisions.”
The costs will be treated as exceptional items. Mr Omari said that Absa is expected to help the Kenyan subsidiary absorb part of the costs by either providing capital or forfeiting part of its dividend entitlements.
This is designed to help the lender maintain its dividend payout to minority shareholders over the transition period.
Ahead of the June 2020 separation deadline, the bank is incurring the cost of rebranding its 212 ATMs, 85 branches and five head office premises besides issuing its customers with Absa-endorsed debit and credit cards.
The lender had already spent Sh387 million in this process in the year ended December, according to its latest annual report. It will implement over 70 technology-specific projects this year to eliminate service dependency on Barclays Plc, helped by a 45-member team formed to oversee the separation.
“One of the most significant technical projects will be the migration of the core banking applications from the UK to South Africa which will be done in the first half of the year,” Barclays says.
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Note: The results are not exact but very close to the actual.
