stephen seaka - absa presentationcdn.entelectonline.co.za/...absapresentation.pdf · microsoft...

IMFO ConferencePromoting effective governance in the public sector

October 2015

Barclays Experience: Stephen Seaka, Head of Public

Sector

2 | IMFO Conference | October 2015

Agenda

1. Introduction

2. ABSA Bank Overview

3. Role of the Bank in Good Governance

4. Conclusion


� It is a pleasure to have the opportunity to address you on behalf of Absa at this IMFO Conference, under the theme ‘Back to Basics: Walking the talk through Effective Governance

� Let me also extend special thanks to all the participants – marks 86th year on existence of IMFO

� The partnership between ABSA and IMFO is one that is deeply entrenched. Not only has ABSA been the primary banker to IMFO, ABSA shares the vision of IMFO to strengthen local government

capacity in order to delivery services to the closest layer of government to communities to operate effectively and to deliver on their mandates

� As ABSA we are aware of the challenges that face local government . With the increased level of urbanisation, the increase in general world population, the economic growth experienced in the

developing world as well as the adoption of decentralised governance systems by more and more countries around the world, the relevance of local government has never been more important.

� Local governments are faced with the challenges of providing infrastructure including roads and transport, electricity and power, water and sanitation, housing, hospitals and clinics, recreation

facilities, as well as other social and economic infrastructure, which require funding including innovative funding solutions. The demand to also deliver public goods and service to communities is also increasing

� Over the past year or so , we have embarked on a new journey that will change the way our clients view the bank , we have done extensive work to really understand our clients ecosystem and how

we as a bank can play a role as joint partners in enabling our clients to achieve their ambition in the right way.

Introduction


Overview of the ABSA Bank and Value Add

Strong Regional

Commitment

The ‘Go-To’ banking partner across Africa

Long track record and

experience

Fully Local, Fully Global

Operating Model

Committed Product

Investment Plan

Award Winning Franchise

Why ABSA?

Key Value-Add

� Global coverage team (Coverage and Cash Management) located in London and Johannesburg for

all Africa requirements / service queries

� Facilitation of interactions with Central Banks in all our markets

� Access to leading macro-economic research / economists covering DSV presence countries

� Africa is key to Barclays global strategy

� Recent strategy announcement May 8th, 2014 confirms regional importance

� Over 150 year presence in region – first branch established in Egypt in 1864

� Important bank supporting in-country economies across region

� Globally coordinated coverage model

� Largest branch network vs. competitors

� In-depth knowledge of local regulations, legal requirements and market practice

� Connectivity channels across Internet, SWIFT and H2H platforms

� Leading innovation drive (e.g. mobile and cash-less banking)

� Streamlining documentation, billing and service infrastructure

� One of the most respected banks in Africa

� Regularly win awards recognizing devotion to customer service / product quality


Absa Bank

R991 billion total assets, A-/Baa1 credit rating

Credit Ratings: Strong Financial Position

� Barclays currently hold 62.3% interest in the Absa Group

� Absa employs approximately 31,191 people, manning 789 branches to serve 9.2 million customers

� Absa Group enjoys a capital reserve in South Africa with a total ratio of 14.4%

� Absa is the highest rated South African Bank with a AAA.zafnational scale rating

Barclays Bank PLC

Agency Long-Term Short-Term

Moody’s A2 P-1

Standard & Poor’s A- A-2

Fitch A F1

BEE Status Capitalisation ratio Market Capitalistion

Level 3 14.4% 154 million

nr = not rated, GSR = Global Scale Rating, NSR = National Scale Rating Absa Bank Limited (“ABL”) rated by Fitch Ratings (“Fitch”) and Moody’s Investors Service; and Barclays

Africa Group Limited (“BAGL”) rated by Fitch only. Under Fitch, the credit ratings disclosed above are the same for both ABL and BAGL and therefore no separate disclosures have been made

Absa Bank Ltd

Agency Long-Term Short-Term

Fitch AAA(zaf) / Sta F1+(zaf)

Moody’s A1.za P-1.za

Standard & Poor’s Nr Nr

Barclays Bank PLC

£1.6 trillion total assets, A credit rating� Founded in 1690 and headquartered in London, Barclays bank

PLC is a major global financial services provider

� Operating in more than 50 countries and employing

approximately 132300 people, Barclays serves 48 million clients


Public Sector Landscape

National Government

Provincial Government

Local Government Education

OrganisedGroup

National Departments

Provincial Departments

Metropolitan Municipalities

Higher Education Universities

Unions

Schedule 2Major SOE’e

Provincial Public Entities Schedule 3C

District Municipalities

FET Colleges Churches

National Public Entities Schedule 3A

Provincial Business Enterprises

Schedule 3D

Local Municipalities

SETA’s

National Business Enterprises

Schedule 3BMunicipal Entities Schools


ABSA: Local Government Geographical Footprint

LimpopoLimpopo

ABSA 12Municipalities: 30ABSA 12Municipalities: 30

Free StateFree StateABSA 18Municipalities: 24ABSA 18Municipalities: 24

MpumalangaMpumalangaABSA 7Municipalities: 21ABSA 7Municipalities: 21

KwaZulu-NatalKwaZulu-NatalABSA 20Municipalities: 61ABSA 20Municipalities: 61

Eastern CapeEastern Cape


GautengGauteng


North WestNorth WestABSA 14Municipalities: 23ABSA 14Municipalities: 23

Northern CapeNorthern CapeABSA 13Municipalities: 32ABSA 13Municipalities: 32

Western CapeWestern Cape



ABSA: Local Government Portfolio

5

12

14

48

23

22

3

7

13

62

47

22

Metros (A)

Secondary Cities (B1)

Large Town (B2)

Small Towns (B3)

Rural (B4)

Districts (C)

ABSABanked

Not ABSABanked

� ABSA, a market leader in the municipal transactional banking space banking 122 of the 278 municipalities (with market share of 44%)

� The ABSA portfolio: ABSA banks 59% (16 of the 27) of the top tier municipalities (metros and secondary cities)


Good Governance

Board of Directors

Management Board Supervisory Board

Control Body

Administrative Body

Control Committee


Importance of Governance

� ABSA as a bank strictly regulated

� Regulated to mitigate risk of failure of bank and systemic risk to financial system

� Regulated by: SARB, Johannesburg Securities Exchange, National Treasury, Companies Act., National

Credit Act, Code of Banking Practice

� Governance structures:

– Board

� Independent non-executive chairperson

� Executive directors and independent directors

– Board Committees

� Audit, Risk, Remuneration

� Depth of management experience at the senior

administrative level

– SARB approves appointment of CEO and CFO

� Promotion of sound business practices

� Quality of internal controls

� Responsible lending practices

– Target lending criteria for local government

� Local Government regulated

� Regulated to enable governance, financial accountability

� Regulated by: MFMA, Municipal Systems Act, Municipal

Structures Act, National Treasury regulations

� Governance structures:

– Council

– Mayoral Committee

– Municipal Public Accounts Committee

– Audit & Performance Committee

– Oversight Committees

� Depth of management experience at the senior

administrative level

– Accounting Officer (City Manager and CFO)

� Promotion of good governance practices

� Quality of internal controls

� Accountability to stakeholders

ABSA Regulation Local Government Regulation


Service delivery

Credit risk assessment

Ability to borrow

Revenue collection

Depth of management experience at the senior administrative level

Quality of internal controls and financial planning

Financial planning and treasury management

Revenue collection

Implementation of programmes and projects

Audit outcome

Importance of Governance in Local Government

Good Governance impacts on Factors impacting service delivery of municipality


Key Initiatives


Package

innovative

Infrastructure

funding models that could enable the Municipalities

to implement

Infrastructure capital

programme

Partner with development

banks to

look at possible

Strategic debt financing models

and mechanisms

Financial Mentoring

TrainingProvide training

workshops for senior and

executive municipal staff,

to equip them with more financial knowledge

Advisory Services Advisory services

on green initiatives based

on our global footprint e.g.

Green home loan/ Bond benefit - Provide home

loans/bond for green

houses, energy efficient

solutions

Citizenship and SMMESupport

Enterprise development

services to the SMME and

Ready to work –Citizenship

Thought Leadership

and Strategic Partnership


Conclusion

Absa as part of Barclays Group a local, regional and global

entity, ABSA remains committed to partner on practical initiatives to strengthen

financial capacity within the sector and ensure that local governments have the

tools to respond more effectively to the development needs of their

communities

As ABSA citizenship is at the center of everything we do, as such

we have worked with local authorities a number of initiatives including youth entrepreneurship facilitating access to finance and non-financial support

We believe that when ambitions change lives, we all prosper

We have strong local government capabilities as

evidenced by our strong presence in local government


Conclusion

Aligning our solutions through effective strategic partnership

and thought leadership

stephen seaka - absa presentationcdn.entelectonline.co.za/...absapresentation.pdf · microsoft...

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