Barclays rights issue inconsequential for Absa


[DATA ASA:ABSA] is separately capitalised and we have got strong capital. Even after we’ve made this dividend payment and the special dividend, we are still going to end up with a common equity tier-1 ratio which is above the board’s common equity guidance,” Ramos the CEO of Absa, told CNBC Africa on Tuesday.

“Our own board here in South Africa and our own business in South Africa, which is regulated primarily by the South African Reserve Bank, looks at capital we need in order to grow the business, sustain the business and says can we afford to pay dividends and makes a decision on that basis.”

The South Africa-based bank declared a special dividend of 708 cents in addition to its interim dividend of 350 cents. This follows reports on Tuesday that, parent company Barclays, is planning to launch a big rights issue.


With a lower-than-expected special dividend, Absa shares fell 5.6 per cent to 143.15 rand when the results were released.

“We had signalled to the market as well as we could that we were looking at returning capital, that we were considering a special dividend. We obviously couldn’t be very specific about the quantum of that special dividend but it was always going to be more or less in the region of six billion rand,” said Ramos.

“I think our ordinary dividend is up 11 per cent which is above our headline earnings and we’ve also indicated today that we think that into the future, we are in a position to continue paying solid dividends and I think that that’s important,” she added.

ABSA’s first half headline earnings per share rose to 649 cents in the first half of 2013 from 599.6 cents in 2012. Bad debt costs fell 14 per cent to 3.5 billion rand.