Barclays is looking to buy around 60 per cent of Absa in a bid to secure control of the South African bank.
The two banks announced last Thursday that they were in early negotiations about a deal that is likely to lead to Barclays spending up to £2bn.
A key reason for Barclays' decision to push for a majority stake rather than a full takeover is South Africa's requirement that black investors hold a minimum of 10 per cent in local companies, according to a Barclays source.
Absa has issued Batho Bonke, a black economic empowerment group, with 73.2 million redeemable preference shares.
However, Batho Bonke has an option to convert its preferences to ordinary shares. This would dilute Barclays' holding in Absa, prompting the British bank to seek a stake of close to 60 per cent. Barclays has previously embarked on full-blown takeovers rather than acquiring majority control.
Another reason for the majority stake is South Africa's sensitivity to any foreign takeover of a big bank, the Barclays source said.
A Barclays spokesman described the black economic empowerment deal as "a positive step", in keeping with the bank's community charter.
Barclays wants to "not only maintain the existing black economic empowerment partners but to see the opportunity for black investment to increase over time".
The deal between Barclays and Absa has some way to go. The British bank has yet to conduct due diligence and settle on a final price.Reuse content