By Portia Nkani
As part of the separation process by Absa Group Limited from Barclays PLC, the Group is busy localizing the applications and resources that have been operating from the international jurisdictions back to South Africa where now the company is headquartered.
The Absa Group separation process from Barclays PLC has been the catalyst for a significant strategic and cultural reset of Absa organisation.
In a teleconference briefing from the Groups’ headquarters in Johannesburg-South Africa yesterday (Monday), Jason Quinn, Absa Group Financial Director indicated that the separation is progressing well, through delivering a combination of standard lift-and-drop solutions, noteworthy systems refresh, and some substantial transformation.
“We have split the 198 services from Barclays into 266 projects in our separation book of work. This includes 24 platinum projects, which are the most complex and interdependent. The number of projects can change as we refine them. At the end of 2018, 103 services contracted with Barclays had terminated and we delivered 140 projects, including 5 that were platinum,” he revealed.
Additional to the above revealation, resources that supported business-critical regional operations applications from the Barclays Technology Centre in India have been successfully transferred to the selected third party, and continue to provide these services under separate contract. Moreover, “We will look to localize resources from India to South Africa over 5 years and plan to localize half by 2021.”
This year is critical, as the Group has 12 platinum projects to deliver. The vast majority remain on track, atleast according to Quinn. As with any programme of this size, there has been slippage in some projects, but the Group said it has worked hard to get them back on track.
One of the most significant technical projects, being the migration of core banking applications for regional operations entities from the UK to SA will be done in the first half, and will remove existing complexities and improve overall customer experience. “We have already completed 6 dress rehearsals to ensure that the “go live” is a success,” he said in addition.
This year the Group also plans to replace its core financial crime systems with an integrated and analytically advanced system that has substantially improved functionality. In addition to separation, the programme is consolidating and digitising core technology services. In most instances, the Group is implementing the same solutions with more recent versions, providing opportunity to improve its current state.
The Group management says it has also made good progress on the work to rebrand its Barclays branded subsidiaries to Absa by June 2020, and products and services in those markets will not be affected by the name change.
Barclays PLC contributed (Great British Pound) GBP765million or R12.6billion to enable Absa to take the steps required to achieve separation and following the regulatory deconsolidation achieved ahead of schedule last year.
The benefit of receiving the contribution upfront is the foreign exchange gains and interest earned on the contribution invested.
Quinn said there is R7.3bn remaining from the aggregate of the initial contribution and the expected benefits of receiving the contribution upfront.
The expectation remains that separation will be capital and cash flow neutral over time as spend is incurred.
“To date we have spent R7.6bn on separation execution and R1.5bn on Transitional Services Agreement (TSA) costs. These include technology and brand projects, programme support and TSA costs. Platinum projects have been about R3bn of the expenditure,” according to Quinn.
Absa Group will host an investor day on separation in the second quarter of 2019.