Absa gets nod for Zambian operation
ABSA has received regulatory approval to start a greenfield insurance business in Zambia, bringing to four the number of sub-Saharan countries where the Barclays-owned bank will have insurance operations.
Group CEO Maria Ramos said in an interview on Thursday that the investment tied in with Absa's growth into the region, where it was partnering with Barclays to expand retail, corporate and investment banking.
She spoke after Absa shareholders approved all 19 resolutions tabled at its annual general meeting, including a long-term incentive plan which outgoing chairman Garth Griffin said was designed to reward executive performance and retain talent.
Ms Ramos said Absa's Africa growth strategy was on track and there was no need to merge its retail banking operations in Mozambique and Tanzania with those of Barclays, as suggested on Thursday by shareholder activist Theo Botha.
"We are moving along with our Africa strategy and we have received regulatory approval both in South Africa and Zambia to set up a financial services business and we will be launching our insurance operations," Ms Ramos said.
This would bring to four the number of Absa insurance businesses in the region after South Africa, Botswana and Mozambique, said Willie Lategan, the CEO of Absa Financial Services.
Further growth was planned into sub-Saharan Africa by leveraging off the Barclays retail bank footprint, Mr Lategan said.
He said Absa saw the Zambian operation as offering short-and long-term insurance.
However, banking analyst Johan Scholtz of Afrifocus said that a "simple short-term insurance product" would offer the ideal entry into Zambia.
Mr Scholtz said Absa had a "brilliant" bancassurance model of using the cross-selling opportunities offered by Barclays' retail footprint in Africa.
"I am quite bullish about their venture. If you look in South Africa, Absa is probably at the top of the pile in terms of bancassurance and they have the skills and capabilities to go into insurance," he said.
Ms Ramos also said that Absa would achieve "modest" earnings growth this year through selective expansion in segments such as un-secured and mortgage lending.
"We have re-engaged a mortgage originator channel to grow our business, but I am not sure whether we will get back to the stage of offering 100% loan -to-value mortgages," she said.
Mr Botha posed several questions at the meeting on Absa's remuneration policy and was particularly concerned that the board would not reveal targets against which executive performance would be measured.
Remuneration committee head Brand Pretorius disagreed with Mr Botha that the board should not be given discretion to alter targets, saying "qualitative and quantitative" targets would be used to assess performance.
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