Regional - Amalgamated Bank of South Africa Limited (ABSA)

The proposed project is a risk sharing facility of USD 250 million, which will be matched by ABSA Bank Group Limited (ABSA) and executed through a Risk Participation Agreement (RPA). ABSA Group Ltd, formerly Barclays Africa Group Ltd, is a South African financial service provider that is 14.9% owned by Barclays Plc. as of December 2017 and is listed on the Johannesburg Stock Exchange. ABSA’s request for an RPA facility from the Bank will allow them to counter-confirm credit risk whilst increasing their trade business to SMEs on the continent. The proposed unfunded Risk Participation Agreement (RPA) with ABSA Bank Group Ltd is one of the ways through which the Bank assists Financial Institutions in their effort to facilitate trade on the continent; thereby helping to reduce Africa’s trade financing gap. Under this arrangement ABSA would provide trade financing to eligible local banks in Africa and underwrite (confirm) their trade finance commitments. AfDB would then guarantee up to 50% of the value of these transactions against non-payment by issuing banks (IBs). This facility will help to promote broad-based economic growth on the African continent through increased facilitation of import-export activities of African corporates and SME’s, and increase intra-Africa trade and regional financial integration (regional integration) in line with the Bank’s Hi5 strategic objectives. The RPA limit will be denominated in USD and the underlying transactions will be conducted in USD, EUR or ZAR. The facility will be for 3 years but the tenor of individual transactions will not exceed 2 years.