| Wed 6 Mar 2002, 0:00 | | Press Release Regarding The Status Of Unifer And T |
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Absa Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1986/003934/06)
(Share code: ASA ISIN: ZAE000013389)
("ABSA")
PRESS RELEASE REGARDING THE STATUS OF UNIFER AND THE RESULTANT IMPACT ON
ABSA
INTRODUCTION
Absa issued a profit warning and a cautionary announcement on 15 January
2002 pertaining to a material shortfall in provisions in UniFer.
UniFer's net asset value (NAV) has subsequently been determined and is dealt
with in a financial notice as of the 6th March 2002. In addition to this, a
presentation is to be made to the media and the investment community
regarding the status of UniFer as well as the resultant impact on Absa. The
information in the presentation is contained in this document.
OVERVIEW AND HIGH-LEVEL FINDINGS
Absa acquired a shareholding in UniFer for a number of reasons. The most
pertinent of these was to gain the number two position in the micro lending
industry. UniFer had a sound business model at the time and part of the
rationale for the acquisition was to develop future banking customers for
Absa's focused business units and to show commitment to an important market
segment.
A thorough process was undertaken when UniFer was acquired. This began in
June/July 1999 with the identification of the mass market as a strategic
imperative for the Group. In order to enhance Absa's share in this market, a
number of options was identified, one being UniFer. In November 1999, a
presentation was made to Absa's executive committee (Exco) relating to the
possible purchase of UniFer. An Absa Board Committee approved the proposal
and the Absa Board acting on advice of Absa's Corporate Finance team, the
Absa management as well as representations by UniFer's current shareholders,
which retained a shareholding in the company. After approval by the Absa
Board of the UniFer purchase, a thorough due diligence investigation was
undertaken and was completed in December 1999. This report contained reports
from all Absa disciplines as well as a previous due diligence conducted by
auditors PriceWaterhouseCoopers (PWC) and input from attorneys Cliff Dekker
Fuller Moore as well as the relevant Exco members and the Board sub-
committee. The UniFer transaction was implemented with effect 31 March 2000.
At the time of the acquisition, Absa's strategy relating to UniFer was not
to "Absadise" UniFer, but to provide full technical and banking support
where required and exert influence through the various boards and board
committees. In addition, four Absa representatives joined the UniFer Board,
with the existing management team continuing to manage UniFer.
When the curtailment of Persal deductions changed the market fundamentals in
micro lending, UniFer responded by announcing a period of consolidation.
After this slowdown, alternative collection methods were introduced and
UniFer's management adopted a strategy of rapid growth. Despite
management's assurances to the contrary, it has become clear that the use of
a decentralised credit model and inadequate administration capacity and
systems underlie the increase in provisioning that arose during that time.
This was exacerbated by misrepresentation to the UniFer Board.
The announcement made on 17 January 2002 highlighted the material
deterioration of UniFer's advances book and the shortfall in provisions,
which was estimated to be R1,5 bn. The announcement promised that a review
of UniFer's NAV would be undertaken by external auditors, after which a
recapitalisation of UniFer was envisaged via a rights offer at 1 cent per
share if the NAV was found to be completely destroyed. Absa also undertook
to follow its rights and to provide support to UniFer's depositors.
The effect on Absa's headline EPS for financial year 2002, if the figures
turned out to be accurate, was estimated to be 100 cents per share.
A number of investigations were instituted, related to UniFer and Absa, to
establish the extent of the problem, why it happened and why Absa did not
know about it in time. These included an investigation into the conduct of
Absa executives on UniFer's Board.
The investigations have revealed that the shortfall in UniFer's provisioning
- at R1,78 billion - is worse than expected. UniFer's NAV is at a negative
R1,14 billion. The adverse impact on Absa's headline earnings per share
(EPS) for F2002 will be 173,2 cents per share.
The investigations have produced evidence of misrepresentation,
mismanagement and fraudulent activities at UniFer, as well as in corporate
governance issues that delayed discovery of the extent of the problem.
It appears that the origin of the UniFer collapse was the cancellation of
the Persal facility and the demand for financial performance from UniFer, a
situation which contributed to UniFer management taking decisions that laid
the foundations for the eventual collapse of the company. UniFer's
management decided to grow volumes from R250 million per month without the
consent of the board and without the administrative systems able to handle
the magnitude of new loans. In addition, the credit policy was changed to a
decentralised model where agents were given mandates to write, approve and
pay out the loans. This also happened without informing the UniFer board.
Management strayed from target markets and a collapse of managerial
supervision and internal controls followed.
This aggressive lending created momentum that the UniFer management found
difficult to stem in time when cautioned by the UniFer board. The damage was
done in five months - March to July 2001 - and was exacerbated by fraud,
mismanagement and misrepresentation.
The problem did not become evident for some time, but at a UniFer board
meeting on 15 May 2001, there were indications of increased lending. The
board cautioned management. Even as this happened, the loan "pipeline" was
already fully primed. What the board did not know in subsequent months was
that the bad debt provisions were inaccurate and months out of date. In
addition, there are indications that further deception was provided by an
apparent abuse of the system.
In June 2001 a new chief executive officer (CEO) took office. As he became
familiar with the company, problems started to surface. Based on concerns
about mismanagement, the board questioned the reasonableness of UniFer's bad
debt provisions by 12 November 2001. This came after bad debt provisions had
already been increased from R70 million to R258 million for the six months
to September. Reacting to the advice of an experienced Absa executive
director, it was decided at the UniFer audit committee meeting of 7 December
2001 that the bad debt provision of R258 million was inadequate, but that
there is not enough information available to understand the extent of the
problem.
Following further investigation by the auditors and Absa staff, the SA
Reserve Bank was informed on 27 December of Absa management's concerns about
bad debts and UniFer's future sustainability. To arrive at a better
estimate of the extent of the bad debt provision at UniFer, the auditors and
Absa staff reviewed the December month-end results. By 10 January they had
concluded that the figure could be approximately R1,5 billion.
Special board meetings were arranged for UniFer and Absa on 14 January 2002.
The news was announced on 15 January and explained to the market and the
public on 17 January. Since then, various investigations have provided Absa
with prima facie indications of fraud, mismanagement and misrepresentation.
Actions have been taken, based on the findings of all the investigations,
which include actions pertaining to Absa representatives as well as the
initiation of disciplinary actions and identification of malpractice in
UniFer.
UNIFER RELATED INVESTIGATIONS
Five UniFer-related investigations were undertaken:
A verification of UniFer's NAV, to establish the extent to which UniFer must
be recapitalised and at what consideration per share.
A corporate governance investigation to establish why the UniFer and Absa
boards were unaware of the extent of the problem earlier, how it became so
big before it was discovered, and who was responsible for the UniFer board
being kept in the dark.
The SA Reserve Bank requested the UniFer board to commission a Section 7
investigation, reviewing Unibank's corporate governance and risk management,
systems and procedures, its information systems and the increase in arrears.
The accounting treatment of a transaction between UniFer and Real People
Holdings (RPH) that had the effect of increasing UniFer's earnings for the
2001 financial year by R27 million before tax.
Given suspicions about the causes of the UniFer collapse, forensic
investigations were essential.
The Absa-related investigation concerned corporate governance to review the
conduct of the Absa members on the UniFer board and determine whether action
needed to be taken by Absa.
Absa's external auditors, Ernst & Young conduct the forensic investigations.
They focused on:
The payment of commissions
The validation of commissions
A review of acquisitions
An examination of inter-company loan accounts
Aging of advances
Related-party transactions
Ernst & Young investigation found that there were strong indications of
fraud, mismanagement and misrepresentation. There were also indications of
prejudicial transactions.
As a result of these investigations, evidence is being collected for various
civil and criminal cases. This will be a slow process. Acting on legal
advice, Absa is not naming any individuals involved at this stage.
External auditors undertook the investigation of the broker network. Two
brokerages, Nkadime and Webbfin, both of which are owned by UniFer, were
investigated.
In both cases misappropriation of business funds was found. Poor compliance
within current credit policy, inadequate controls and non-compliance with
procedures and policies were found. Six people have been issued with notices
to attend disciplinary hearings that will take place next week.
The corporate governance investigation:
The UniFer board commissioned Deloitte & Touche to conduct an investigation
into the corporate governance processes at UniFer. This report is not
complete, but preliminary indications are that the corporate governance
processes at UniFer were neither adequate nor effective.
At Lantern, an Eastern Cape microlender in the UniFer Group, the UniFer
board commissioned a forensic investigation into the accounting treatment of
a transaction with Real People Holdings (RPH). Deloitte & Touche Forensic
Services conducted this investigation.
Deloitte & Touche submitted a preliminary report to the UniFer board and
audit committee chairmen on 22 February 2002. The UniFer board has appointed
a sub-committee of non-executive directors to review action once Deloitte &
Touche has completed investigations.
Clearly the UniFer collapse is not the result of business as usual. It is an
extraordinary confluence of bad faith, changes in the business environment,
mismanagement and very possibly criminal action.
INVESTIGATION RELATING TO ABSA MEMBERS ON THE UNIFER BOARD
Absa's board appointed a committee of non-executive directors, with the
purpose of reviewing Absa's corporate governance in relation to UniFer and
to investigate the competence of those entrusted to manage Absa's investment
in UniFer.
The committee, consisting of Absa chairman Danie Cronj and deputy chairman
Dave Brink drafted a chronological sequence of events, conducted interviews
with all the relevant players and used a team to gather all relevant
documentation for review. The committee and the Absa board are satisfied
that the investigation complies with the norms of rigour and completeness
and that the decisions taken confirm Absa's commitment to business ethics,
further improve corporate governance and reflect prudent management of
Absa's affairs.
In reviewing the actions of the Absa representatives on the UniFer Boards
and Committees the committee could find no evidence that any of them acted
in bad faith or with gross negligence. However, it noted that the Absa
representatives acted as though they were dealing with an organisation of
similar sound corporate management culture as Absa. This led to errors of
judgement.
They expected, for instance, that when the Absa representatives on the
UniFer board recommended actions, UniFer's management would supervise follow-
up implementation and that if they failed to do so this would be reported to
the board. The committee believes that sight must not be lost of the role
played in many cases by UniFer's management and officers who acted in a way
that made it difficult for the UniFer Board to take sound business decisions
timeously because of inappropriate disclosure.
The committee concluded that Nallie Bosman had fulfilled his board
responsibility at UniFer in exemplary fashion. From a governance
perspective he correctly warned the UniFer Board about the dangers of the
high advances growth. Because he was not aware of the UniFer management's
bad faith in upholding their side of the corporate governance contract and
because of his span of control it was impossible for him to personally
manage the UniFer management's response.
Frans du Toit only became involved in the UniFer board at a later stage. The
committee's view was that the interventions he initiated made a difference
in the eventual discovery of the extent of the problem. The committee
concluded that he had behaved in a professional manner.
Bert Griesel managed a very wide portfolio and relied to a large extent on
the executives reporting to him to act on his behalf. His achievements in
other areas under his control speak of high performance and dedication.
Nonetheless, the committee believed that he should have detected corporate
governance failures, particularly because he noted the lack of cohesion
between UniFer's Exco and its operations.
Eric Tomlinson was responsible for the direct supervision of the UniFer
initiative because of his extensive and specific experience. Mr Tomlinson is
leaving the company in terms of a mutually agreed contract. He accepted
operational responsibility, but the committee believes that while there were
errors of judgement, he is not culpable.
Mr Griesel is relinquishing his current position as a member of the Absa
Executive Committee. He had accepted portfolio responsibility for the
UniFer collapse, but not culpability. He is taking up a fulltime position
at UniFer as Deputy Chairman with the brief to manage UniFer's recovery.
The board appreciates his contribution to Absa over the past few years and
is confident that he will redeem his reputation in the market by turning
UniFer around.
Absa is taking the lessons of this episode to heart. Absa is of the view
that when taking a controlling stake in a bank in future, it is also
necessary to take management control. This was demonstrated to profitable
benefit in Tanzania. Monitoring will in future not be left to the
subsidiary. Absa's internal auditors will assist the company in question to
report through its Board.
Absa will also get involved in the operational side of any business it
acquires early on and ensure good communication at all levels of the
organisation. Managers will be reminded that when they become a member of
any Board, they have direct responsibility for its affairs and that they
should maintain their personal independence in applying their minds to the
business of that Board.
A special board committee will review policies regarding the management of
investments and subsidiaries, so that they make appropriate recommendations
to the Absa board.
Absa's believes it has handled the UniFer matter in a way that demonstrates
good corporate governance. This is particularly true with regard to
decisive, immediate management action, thorough independent investigation
and transparent disclosure. Throughout there was a willingness to protect
depositors and market confidence by standing behind UniFer's depositors.
Absa plays a leading role in South African banking and is determined that
this role will grow.
UNIFER'S NAV AND THE RESULTANT IMPACT ON ABSA
INDEPENDENT INVESTIGATION
At the time of the identification of the bad debt problem, the management
and Board of UniFer had limited time to quantify the potential loss and the
resultant impact on the NAV of the Group.
The estimate at that time was that UniFer's NAV was marginally negative and
that a significant capital injection (between R1 and R1,3 bn) would be
required to restore the capital adequacy of the Group.
Absa acted quickly by committing to the recapitalisation of UniFer through a
rights issue, but the position of minorities was intricate. The NAV of
UniFer, after appropriate provisioning, was a very important factor in
determining the price at which the rights would be issued.
The UniFer Board therefore decided to appoint the external auditors of
UniFer (Ernst & Young (E&Y)) to assist management to evaluate the assets and
liabilities of the Group with a view to determining a realistic NAV.
E&Y are also Absa's auditors and it was considered appropriate to counter
possible suggestions of conflict of interests by appointing Deloitte &
Touche to review the reasonableness of the methodology and assumptions used
by management and E&Y.
In addition to the above Barnard Jacobs Mellet (BJM), UniFer's sponsor, was
appointed to advise the board on the interests of minorities during the
course of the process.
METHODOLOGY USED TO DETERMINE UNIFER'S NAV
The figure for additional provisions required (R1,5 bn) that was presented
to the market and the public on 17 January and was based on the following
rationale:
All debts in arrears were provided in full
A recovery of 20% of the provided amount was assumed.
Given the importance of the exercise, the increased time and resources that
were available, the team had the opportunity to develop a comprehensive
provisioning matrix that would provide for doubtful debts on the basis of
customer behaviour over the last six months.
The levels of provisions were based on the amount received from the customer
over the last six months as a percentage of total instalments due over the
same period. The time and manner in which the payments were received
however, further influenced the provision. Typically, a customer who had
made a payment in the last month of the review and had made five out the
last six payments, was considered to be a better risk than a customer who
had also paid 83% of the last six instalments, but had missed the last
month's payment. Likewise a customer who paid 83% of his last six
instalments in one lump sum would not be considered to be of the same
quality as the customer who had made regular payments over the period.
Finally, the provision amounts were compared to the experience of companies
with similar exposure. All debts in arrears for 180 days or longer have
been provided in full while the balance of the book - considered the good or
normal book - has been provided to approximately 25%. Indications are that
the micro-lending industry's ratio of NPLs to the total book currently
constitutes between 15% and 25% of a normal book.
In addition to the revision of bad debt provisions, the team also evaluated
the other assets and liabilities of the Group for potential impairment or
understatement.
UNIFER'S CURRENT NAV
The NAV impairments are explained in relation to the NAV that was disclosed
to shareholders at the interim stage (Sept 2001) when the equity of the
Group was R1 031mn.
Operating losses for the three months to December 31, 2001 - constituting
largely bad debts - amounted to R230 mn.
Additional bad debt provisions, based on the provisioning matrix, amounted
to R1 780 mn while a further amount of R165 mn was identified as asset
impairments. These impairments were items such as goodwill on the
acquisition of brokers that are now considered to be worthless, discontinued
operations and the adjustment of the value of assets.
The creation of a deferred tax asset to reflect the future tax shield to
UniFer's shareholders is dependent on the future profitability of UniFer.
The major focus for the immediate future is the recovery of the current book
and the volume of new lending will reflect a cautious approach. UniFer is
expected to trade profitably but only modestly so. The Board therefore
considered it prudent not to create an additional deferred tax asset.
These adjustments leave UniFer with a negative NAV of R1 144mn as at 31
December 2001.
IMMEDIATE PROSPECTS
UniFer is expected to trade modestly profitably, but this is subject to a
significant reduction in the cost structure of UniFer. The restructuring of
UniFer, to create a delivery platform consistent with the expected new
business volumes, would necessitate the closure of branches and the
retrenchment of staff. This is estimated to cost R32 mn while the operating
results for the remaining three months would not have a further material
impact on the NAV of UniFer.
RIGHTS OFFER
At the time of making the announcement regarding the UniFer bad debt
situation it was anticipated that the NAV was marginally negative. It was
difficult to judge whether the methodology adopted at the time was overly
conservative or not prudent enough - hence the qualification at the time and
the independent investigation.
Absa anticipated discomfort amongst the minority shareholders while
uncertainty existed as to the extent of the value destruction. An offer to
minorities at that time would have resulted in serious questions over the
reasonableness of such an offer.
Recapitalisation offered the following benefits:
Dealing with the matter in a totally transparent manner,
Minorities had the option to follow their rights if they felt that the
rights offer price was too low,
A "standby offer" would be available to minorities to exit at the rights
offer price with the benefit of a
Claw-back clause in the event that it turns out that the provisions were
overstated.
DEALING WITH MINORITIES - SCHEME OF ARRANGEMENT - (SECTION 311)
The result of the independent review presented the board with different
challenges. It became apparent that the NAV was substantially negative,
leaving minorities with little chance of recovering anything from their
original investment.
A claw-back clause offers little hope in the face of such a significant
accumulated loss and the business prospects of UniFer are considered to be
moderate on a stand-alone basis.
In the light of these developments the UniFer Board was more comfortable to
recommend an exit price to minorities.
Absa, on the other hand, believes that maximum value can be extracted from
this venture if the operations are combined with existing delivery and
administrative platforms of Absa.
SCHEME OF ARRANGEMENT
The likely outcome of this arrangement is that:
Absa will acquire 100% of UniFer
UniFer will be delisted
The banking license will be surrendered
Absa will convert the business onto its own delivery platform
Section 54, in term of which the assets and liabilities of Unibank are
transferred to Absa, will be considered.
However, the above actions should not be at the expense of losing the tax
asset. Absa, supported in principle by the South African Reserve Bank
(SARB), prefers the section 54 route but the timing will depend on certainty
of the future tax position.
IMPACT ON ABSA
The impact on Absa's headline earnings per share is expected to be 173,2
cents per share for F2002. Of this amount, 21,7 cents represents Absa's
share of the earnings that were expected from UniFer based on UniFer's
announcement at the interim stage that flat earnings growth is expected for
the full year.
These figures have been calculated on the assumption that the Absa Group
will be able to realise the tax asset flowing from the losses at UniFer.
The amount of the tax asset in the consolidated financial statements of the
Group is expected to be in the order of R400 mn.
MARKET EXPECTATIONS
The operations of Absa Group Limited, other than UniFer, are performing
according to plan and are well within market expectations. In making this
statement the possible provision for the impairment of the advance to UniFer
is excluded on the basis that it is related to the UniFer issue.
Absa regrets that the UniFer debacle has tarnished its own performance. .
It is relevant, however, to note that the earnings of UniFer would have
constituted a relatively small portion (R141mn or 5%) of the Group's
earnings for F2002 and that the remainder of the earnings are considered to
be of high quality - specifically with regard to sustainability.
It is envisaged that in F2003, UniFer will contribute an amount equal to the
opportunity cost (prime plus 50 bp) of the amount (R1 200 mn) that is used
to capitalise UniFer. This would leave the Group in a net neutral position -
in other words UniFer is not expected to have a drag affect on Absa's
earnings but it is also not expected to improve the earnings of the
remainder of the Group in the immediate future.
Impact on Absa Group capital adequacy
The impact on the capital adequacy of the Group on the basis of the
September 2001 position:
Total adequacy drops from 12,1% to 11,0%
Tier 1 capital drops from 8,8% to 7,7%
Tier 2 capital remains unaffected
On a consolidated basis the Group complies with the current regulations. The
Tier 1 capital level is above the 7.5% guideline of the SARB. This reflects
the opportunity that exists to strengthen the capital adequacy of the Bank
with a reallocation of capital from other operations to the bank. A
capitalisation dividend is a strong option to bolster capital adequacy and
given the strong profitability of the Group, the Tier 1 capital is estimated
to remain at a sound level without attracting additional Tier 1 capital.
Impact on Absa Bank capital
The impact on the capital adequacy of the Bank, because of the provision
against the UniFer advance, is as follows based on the September 2001
position:
Total adequacy drops from 10,1% to 9,5%
Tier 1 capital drops from 6,3% to 5,7%
Tier 2 capital remains unaffected
A bond issue is contemplated for March 2002 and this will bolster the
capital position of the bank considerably. In addition the issue of Tier
111 capital to capitalise the trading activities of the Group will be under
consideration over the short term. Tier 1 capital is above the 5% current
regulations and compulsory conversions of Tier 11 capital into Tier 1
capital that is scheduled for Sept 2003 and December 2004 will improve the
Tier I ratio to be in excess of the 7.5% guideline of the SARB.
INDICATIVE TIMETABLE
The timetable of the events is broadly as indicated below. Please note that
the abridged timetable assumes drafting commences during the process of
obtaining ministerial approval.
Ministerial approval D
Submit Circular to JSE/SRP D
Formal approval JSE/SRP D + 14
Lodge application to Court D + 16
Court grants leave to D + 21
convene scheme
Press announcement (salient D + 23
dates & notice of scheme)
Mail Circular to D + 23
shareholders
Scheme meeting D + 52
Court sanctions scheme D + 64
Lodge Court Order for D + 65
Registration
Consideration cheques posted D + 71
THE WAY FORWARD
Recent Absa research into the scope and potential of the micro lending
industry indicated a mass market of 13 million people - 5,7 million banked
and 7,3 million unbanked. The value of the micro lending market is estimated
at R24,2bn - R13,8 billion formal and R10,4 billion informal. The
profitability of term loan (for a loan between R1 000 and R8 500) was 30%-
56% for a 12-month loan, 32%-46% for an 18-month loan and 31%-43% for a 24-
month loan. Participants in the microlending market are formally registered
firms, semi-formal moneylenders and informal moneylenders.
UniFer's business scope will be clearly focused in the short term to become
a single product company focusing on micro loans. The company will provide
lending to the wholesale market (payroll-based, corporates and unions) as
well as to individuals who meet strict credit approvals and who are
employed.
In addition to term loans (micro loans), UniFer will also earn revenue via
administration fees, commissions from insurance products such as funeral
insurance and credit life as well as cross selling Absa's products and
services (transaction account, electronic network as well as simple savings
and investment products).
Loans will be provided via Absa branches, union schemes, an accredited
broker network as well as employee group schemes. UniFer's core operations,
Unibank, Nkademe and Webbfin, will be integrated into one business, with
Lantern focusing on collections in future. Non-core operations such as
mortgages, credit cards and corporate loans will be integrated into Absa's
operations or will be disposed of.
Achievements to date are a new structure compiled and approved by the UniFer
board; Absa appointments made at UniFer; revision of UniFer's credit and
provisioning policies; establishing an enterprise-wide risk management
function at UniFer; the initiation of a staff reduction programmes and
project plans have been completed and the divestment process has started.
The focus at UniFer for the next three months will be to bed down new
management structures, build credit and risk management capabilities,
aggressive collections, act on the findings of investigations, divest non-
core operations and migrate UniFer's processes and systems to Absa's
infrastructure.
The focus at Absa will remain on achieving its strategic goals - top-line
growth in Absa Group, cost containment and the retention of market share.
Absa remains a leading South African banking group. Absa is the country's
largest retail bank with assets of R214bn as of September 2001. In addition,
Absa has a credit rating of AA+ from Fitch and AA from CA Ratings, in line
with its peers. There are also a number of other areas where Absa has unique
strengths such as a complete range of retail, commercial and corporate
banking, insurance and property services with extensive local and
international networks.
Absa has an advanced IT capability and a strong market share position. It
has market leadership positions in mortgage advances (30.7%), overdrafts &
other loans (20,08%) and fixed, notice and other loans (19.15%).
It has strong market positions - instalment finance (24.96% - second largest
market share), credit cards (22,05% - 2nd largest market share), cheque &
transmission accounts (25.66% - 2nd largest market share), savings accounts
(25.56% - 2nd largest market share).
Absa has a large customer base (5,1mn retail banking customers - of which
2,1mn reside within Flexi Banking Services, 441 674 business banking
customers and 2 320 corporate customers - total customer base of 5,6m)
As at January 2002, Absa had 655 outlets, 2 637 automated teller machines
(ATMs), operates in 12 international countries, 266 965 Internet banking
customers and 241 793 telephone banking customers.
Absa, excluding UniFer, is performing very well and in line with
expectations. Earnings from these operations represent the future
sustainable earnings of the Group.
Absa has restructured its executive committee to ensure proactive management
of Absa's affairs. In time, the Exco structure will probably reflect the
business structure of the Absa Group, which consists of corporate and
merchant banking, commercial banking, and retail banking and financial
services. However, this will form part of the normal strategic planning
cycle of the group and there is no reason for haste. The Group is performing
well in its current management structure and changes must represent
demonstrable improvements.
Absa would like to obtain closure on the UniFer issue and refocus its
efforts on Absa's core business, ensuring that Absa remains a leading and
successful bank, serving its customers, shareholders and South Africa.
The slide presentation, including graphs and organograms, is available on
the Absa website (
