Standard Bank Group Limited

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 5 of this Circular apply throughout this Circular including this cover page and the notice of General Meeting. Action required This Circular is important and should be read in its entirety, with particular attention to the section entitled Action Required by Standard Bank Group Shareholders which commences on page 3. If you are in any doubt as to the action that you should take, please consult your CSDP, Broker, legal adviser, accountant or other professional adviser immediately. If you have disposed of all of your Standard Bank Group Shares, this Circular, together with the attached form of proxy (blue), should be forwarded to the purchaser to whom, or the CSDP, Broker or agent through whom the disposal was effected. Standard Bank Group does not accept responsibility and will not be held liable for any failure on the part of the CSDP, broker or banker of any holder of Standard Bank Group Shares to notify such Shareholders of this Circular. Standard Bank Group Limited (Incorporated in the Republic of South Africa) (Registration number 1969/017128/06) South African Share Code: SBK ISIN: ZAE SBKP ZAE (First preference shares) SBPP ZAE (Second preference shares) Namibian Share Code: SNB ISIN: ZAE JSE bond codes: SBS, SBK, SBN, SBR, ETN series, SSN series and CLN series (all JSE listed bonds issued in terms of The Standard Bank of South Africa Limited s Domestic Medium Term Note Programme and Credit Linked Note Programme) CIRCULAR TO STANDARD BANK GROUP SHAREHOLDERS relating to: the disposal by Standard Bank Group to Industrial and Commercial Bank of China Limited ( ICBC ) of a controlling interest in its London-based Global Markets business (the OA Global Markets Business ), through the: disposal of 60 per cent of the ordinary share capital of Standard Bank Plc; and grant of a call option to ICBC to acquire a further 20 per cent of the ordinary share capital of Standard Bank Plc (the ICBC Call Option ); and approval of the Proposed Transaction which is deemed to be a related party transaction in terms of the JSE Listings Requirements; and incorporating: a notice of General Meeting of Standard Bank Group Shareholders; and a form of proxy (blue) (to be completed by holders of Certificated Shares and holders of Dematerialised Shares with own name registration only). Date of issue: 24 February 2014 This Circular is available in English only. Copies may be obtained during normal business hours from the registered office of Standard Bank Group, the investment bank and transaction sponsor, and the Transfer Secretaries, whose addresses are set out in the Corporate information and advisers section of this Circular. The Circular will be available from Monday, 24 February 2014 until Friday, 28 March 2014, both days inclusive. The Circular will also be available in electronic form from the Group s website from Monday, 24 February 2014.

2 Investment bank and transaction sponsor Joint independent reporting accountants and auditors Joint independent reporting accountants and auditors Legal advisers to Standard Bank Group in the UK and internationally Transfer Secretaries in Namibia Independent Professional Expert Legal advisers to Standard Bank Group in South Africa Transfer Secretaries in South Africa Lead Independent Sponsor Deutsche Securities (SA) Proprietary Limited (A non-bank member of the Deutsche Bank Group) Sponsor to Standard Bank Group in Namibia

3 CORPORATE INFORMATION AND ADVISERS Group Secretary and registered office of Standard Bank Group Zola Stephen (BProc) (LLB) 9th Floor, Standard Bank Centre 5 Simmonds Street Johannesburg, 2001 (PO Box 7725, Johannesburg, 2000) South Africa Investment bank and transaction sponsor to Standard Bank Group The Standard Bank of South Africa Limited (Registration number 1962/000738/06) 9th Floor, Standard Bank Centre 5 Simmonds Street Johannesburg, 2001 (PO Box 61344, Marshalltown, 2107) South Africa Joint independent reporting accountants and auditors to Standard Bank Group KPMG Inc. KPMG Crescent 85 Empire Road Parktown, 2193 (Private Bag 9, Parkview, 2122) South Africa Independent Professional Expert Merrill Lynch International (Registration number ) 2 King Edward Street London, EC1A United Kingdom Legal advisers to Standard Bank Group in the United Kingdom and internationally Clifford Chance LLP (Registration number OC323571) 10 Upper Bank Street London, E14 5JJ United Kingdom Legal advisers to Standard Bank Group in South Africa Bowman Gilfillan Inc. (Registration number 1998/021409/21) 165 West Street Sandton, 2196 (PO Box , Sandton, 2146) South Africa Transfer Secretaries to Standard Bank Group in South Africa Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) South Africa Transfer Secretaries to Standard Bank Group in Namibia Transfer Secretaries Proprietary Limited (Registration number 93/713) 4 Robert Mugabe Avenue (entrance in Burg Street) Windhoek (PO Box 2401, Windhoek) Namibia Joint independent reporting accountants and auditors to Standard Bank Group PricewaterhouseCoopers Inc. (Registration number 1998/012055/21) 2 Eglin Road Sunninghill, 2157 (Private Bag X36, Sunninghill, 2157) South Africa Sponsor to Standard Bank Group in Namibia Simonis Storm Securities (Proprietary) Limited (Registration number 96/421) Koch Street Windhoek (PO Box 3970, Windhoek) Namibia Lead Independent sponsor to Standard Bank Group Deutsche Securities (SA) Proprietary Limited (Registration number 1995/011798/07) 3 Exchange Square 87 Maude Street Sandton, 2196 (Private Bag X9933, Sandton, 2146) South Africa Date and place of incorporation 25 November 1969, Pretoria 1

4 TABLE OF CONTENTS CORPORATE INFORMATION AND ADVISERS 1 ACTION REQUIRED BY STANDARD BANK GROUP SHAREHOLDERS 3 SALIENT DATES AND TIMES 4 DEFINITIONS AND INTERPRETATIONS 5 Circular to Standard Bank Group shareholders 1. Introduction and purpose of this Circular The Global Markets business within Standard Bank Group Rationale Categorisation and related party transaction Salient terms of the Proposed Transaction Standard Bank Plc Group re-organisation The initial purchase of 60 per cent of Standard Bank Plc s ordinary shares The ICBC Call Option The Standard Bank Put Option Conditions Precedent Other significant terms of the Proposed Transaction Material Adverse Change Key provisions of the Shareholders Agreement Effective Date Application of the Consideration Pro forma financial effects of the Proposed Transaction Fairness opinion Directors opinion and recommendation Estimated expenses in relation to the Proposed Transaction Major Shareholders Material contracts Material change Litigation statement Directors responsibility statement Consents General Meeting Documents available for inspection 26 ANNEXURE 1: REPORT OF THE INDEPENDENT PROFESSIONAL EXPERT 27 ANNEXURE 2: ANNEXURE 3: Page PRO FORMA FINANCIAL INFORMATION PURSUANT TO THE PROPOSED TRANSACTION 31 JOINT INDEPENDENT REPORTING ACCOUNTANTS REPORT ON THE PRO FORMA FINANCIAL INFORMATION 37 NOTICE OF GENERAL MEETING 39 FORM OF PROXY Attached 2

5 ACTION REQUIRED BY STANDARD BANK GROUP SHAREHOLDERS This Circular is important and requires your immediate attention. Please take careful note of the following provisions regarding the action required by Standard Bank Group Shareholders. If you are in any doubt as to what action to take, please consult your attorney, Broker, CSDP or other professional adviser immediately. If you have disposed of all of your Standard Bank Group Shares, this Circular should be handed to the purchaser of such Shares or the attorney, Broker, CSDP or other agent who disposed of your Standard Bank Group Shares for you. The General Meeting of Standard Bank Group Shareholders will be held at 09h00 on Friday, 28 March 2014, at the HP de Villiers Auditorium, Ground Floor, Standard Bank Centre, 6 Simmonds Street, Johannesburg to consider and if deemed fit, pass, inter alia, the resolutions required to authorise the implementation of the Proposed Transaction. A notice convening the General Meeting is attached to and forms part of this Circular. Action required by Certificated Shareholders You are entitled to attend, or be represented by proxy, at the General Meeting. If you are unable to attend the General Meeting, but wish to be represented thereat, you must complete and return the attached form of proxy (blue), in accordance with the instructions contained therein, to be received by the Transfer Secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001, South Africa (PO Box 61051, Marshalltown, 2107) in South Africa and Transfer Secretaries Proprietary Limited, 4 Robert Mugabe Avenue (entrance in Burg Street), Windhoek (PO Box 2401, Windhoek) in Namibia, by no later than 09h00 on Wednesday, 26 March Action required by Dematerialised Shareholders 1. If you hold Dematerialised Shares other than with own name registration: 1.1 Voting at the General Meeting Your Broker or CSDP should contact you to ascertain how you wish to cast your vote at the General Meeting and thereafter cast your vote in accordance with your instructions If you have not been contacted by your Broker or CSDP, it is advisable for you to contact your Broker or CSDP and furnish them with your voting instructions If your Broker or CSDP does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your Broker or CSDP You must not complete the attached form of proxy (blue). 1.2 Attendance and representation at the General Meeting In accordance with the mandate between you and your Broker or CSDP, you must advise your Broker or CSDP if you wish to attend the General Meeting and your Broker or CSDP will issue the necessary letter of representation to you to attend the General Meeting. 2. If you hold Dematerialised Shares with own name registration: 2.1 Voting and attendance at the General Meeting You may attend the General Meeting in person and may vote at the General Meeting Alternatively, you may appoint a proxy to represent you at the General Meeting by completing the attached form of proxy (blue) in accordance with the instructions contained therein and returning it to the Transfer Secretaries, to be received by no later than 09h00 on Wednesday, 26 March

6 SALIENT DATES AND TIMES 2014 Record date to receive Circular and notice of General Meeting Circular and notice of General Meeting posted to Shareholders Last day to trade in Standard Bank Group Shares in order to be recorded in the register to participate and vote at the General Meeting Voting record date to determine which Shareholders are entitled to attend and vote at the General Meeting Last day for Shareholders to lodge forms of proxy (blue) for the General Meeting by 09h00 General Meeting to be held in the HP de Villiers Auditorium, Ground Floor, Standard Bank Centre, 6 Simmonds Street, Johannesburg at 09h00 Results of the General Meeting released on SENS Results of the General Meeting published in the South African and Namibian press Friday, 14 February Monday, 24 February Thursday, 13 March Thursday, 20 March Wednesday, 26 March Friday, 28 March Friday, 28 March Monday, 31 March Notes: 1. The above dates and times are subject to change. Any material changes will be released on SENS and published in the South African and Namibian press. 2. All times quoted in this Circular are South African times. 3. If any form of proxy is not delivered timeously to the address of the Transfer Secretaries as set out in the Corporate Information and Advisers section of this Circular, it may be handed to the chairman of the General Meeting at any time before the proxy exercises any rights of the Shareholder at the General Meeting. 4. If the General Meeting is adjourned or postponed, an appropriate announcement will be released on SENS and published in the South African or Namibian press. In such circumstances a form of proxy must be received preferably by no later than 48 hours prior to the time of the adjournment or postponement of the General Meeting (excluding Saturdays, Sundays and official public holidays in South Africa) at the offices of the Transfer Secretaries, provided that if any form of proxy is not delivered timeously it may be handed to the chairman of the adjourned or postponed General Meeting at any time before the proxy exercises any rights of the Shareholder at such adjourned or postponed General Meeting. 4

7 DEFINITIONS AND INTERPRETATIONS In this Circular, unless otherwise stated or the context otherwise indicates, the words and expressions in the first column shall have the meanings stated opposite them in the second column and words and expressions in the singular shall include the plural and vice versa, words importing natural persons shall include corporations and associations of persons and vice versa and any reference to one gender shall include the other gender: Affiliates Board or Directors Branch or Branches Broker Business Day Cent Certificated Shareholders Certificated Shares China Corporate and Investment Banking or CIB Circular Commodities Products Companies Act Completion Completion Date Standard New York, Inc. (Registration number ), Standard New York Securities, Inc. (Registration number ), Standard Americas, Inc. (Registration number ) (all companies incorporated in the state of Delaware, the United States of America) and the Global Markets operations of Standard Merchant Bank (Asia) Limited (Registration number K), a company incorporated in Singapore, and all of which are wholly owned subsidiaries of Standard Bank Group through SBLH; the board of directors of Standard Bank Group, as at the Last Practicable Date, whose names are set out on page 13 of this Circular; branches of Standard Bank Plc registered in Dubai, United Arab Emirates; Hong Kong, Special Administrative Region of China; Tokyo, Japan; and Singapore; any person registered as a broking member (equities) in terms of the rules of the JSE in accordance with the provisions of the Financial Markets Act; any day (other than a Saturday or Sunday) when banks in London, Beijing and Johannesburg are open for the transaction of normal business; South African cent in the official currency of South Africa; holders of Certificated Shares; Shares that have not been Dematerialised, title to which is represented by a share certificate or other documents of title; the People s Republic of China; the Corporate and Investment Banking business of the Standard Bank Group; this bound document dated Monday, 24 February 2014 relating to the Proposed Transaction, including the annexures hereto, the attached notice of General Meeting and the form of proxy (blue); exposures to and investments in precious metals, base metals, bulk commodities (such as coal and iron ore) and energy products (such as oil and carbon credits) both directly and in derivative form; the South African Companies Act, 71 of 2008, as amended or superseded from time to time; completion of the Proposed Transaction in terms of the Transaction Agreements; the date which is the last day of the calendar month following the calendar month during which the Conditions Precedent are fulfilled or waived, as the case may be, (other than the conditions set out in paragraphs 5.5 (x), 5.5 (xi) and 5.5 (xiv) of this Circular) which is expected to be during the fourth quarter of 2014; 5

8 Computershare Conditions Precedent CSDP Dematerialisation or Dematerialised Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07), a private company duly registered and incorporated with limited liability in accordance with the laws of South Africa; the conditions precedent to the Proposed Transaction as set out in paragraph 5.5 of this Circular; Central Securities Depository Participant, being a participant as defined the Financial Markets Act and appointed by individual Shareholders for the purposes of, and in regard to, Dematerialisation in terms of such act; the process by which securities held in certificated form are converted to or held in electronic form and uncertificated securities and recorded in a sub-register of securities holders by a CSDP, after the documents of title have been validated and cancelled by the Transfer Secretaries and captured onto the Strate system by the selected CSDP or Broker, and the holding of securities is recorded electronically; Dematerialised Shareholders holders of Dematerialised Shares in Standard Bank Group; documents of title Enforcement Action EPS share certificates, certified transfer deeds, balance receipts, or any other documents of title to shares; any action taken by: (a) the FSA, PRA, or FCA (as the case may be) pursuant to its powers under FSMA to enforce the relevant Laws, including any handbook of rules and guidance issued pursuant to FSMA; or (b) any other regulatory authority or Governmental Authority to enforce the relevant Laws in any jurisdiction by which a member of the Standard Bank Plc Group, Branch or representative office of Standard Bank Plc is or has been regulated or to which a member of the Standard Bank Plc Group, Branch or representative office of Standard Bank Plc is or has otherwise been subject, in each case arising as a consequence of an event occurring prior to the Completion Date; earnings per share; Exchange Control Regulations the Exchange Control Regulations, 1961, as amended, promulgated in terms of section 9 of the South African Currency and Exchanges Act, Act 9 of 1933, as amended or superseded from time to time; Excluded Business Excluded Business Transfer Agreement FCA FCTR business lines other than the OA Global Markets Business that have historically been conducted by the Standard Bank Plc Group and which include (without limitation) the Service Unit and the business lines conducted and reported to the date of the Sale and Purchase Agreement under the descriptions Investment Banking business, Transactional Products and Services business and Principal Investment Management business, together with other historic and now discontinued lines of business outside of the OA Global Markets Business including the ownership, conduct and operation of those representative offices of Standard Bank Plc that are to be closed pursuant to the steps as set out in paragraph 5.1 of this Circular; business transfer agreement(s) between Standard Bank Plc and NewCo for the transfer of the Excluded Business to NewCo; UK Financial Conduct Authority (and any successor(s) from time to time); foreign currency translation reserve; 6

9 FICE Products Financial Markets Act Fitch Force Majeure Event FSA FSMA General Meeting Global Markets Products Governmental Authority Group Headline Earnings HEPS ICBC ICBC Call Option IFRS Independent Professional Expert or Merrill Lynch fixed income, currencies and equity investments in both cash, deliverable and derivative form and fixed income includes such investments denominated in local currencies (local markets), interest rate products, financing by way of sale and repurchase agreements, money market investment products (cash deposits, government securities, bills of exchange and other cash-like investments with a maturity of less than one year) and debt securities investments; South African Financial Markets Act 19 of 2012, as amended or superseded from time to time; Fitch Ratings Inc. or any successor thereto; an event over which the Parties have no control, including (without limitation) any regional conflict, any act of war, any act of terrorism, declaration of emergency or martial law, an act of god, earthquake, tsunami or natural disaster of any nature or other calamity, in each such case, which has a material adverse effect on Standard Bank Group s ability to perform its obligations under the Sale and Purchase Agreement; UK Financial Services Authority (now succeeded by the FCA and PRA); UK Financial Services and Markets Act 2000, as amended or superseded from time to time; meeting of Standard Bank Group Shareholders convened in terms of the notice of General Meeting attached to and forming part of this Circular to vote on the ordinary resolutions required to approve the Proposed Transaction, which General Meeting is to take place at the HP de Villiers Auditorium, Ground Floor, Standard Bank Centre, 6 Simmonds Street, Johannesburg at 09h00 on Friday, 28 March 2014; FICE Products and Commodities Products; any supranational body, any nation or government, any independent government department, any state, province, municipality, prefecture or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government; Standard Bank Group and its subsidiaries from time to time; headline earnings determined in terms of the circular issued by the South African Institute of Chartered Accountants at the request of the JSE; Headline Earnings per Share; Industrial and Commercial Bank of China Limited (Corporate business license number ), a company duly incorporated in accordance with the laws of China, being the purchaser in terms of the Proposed Transaction; a five year option in terms of which ICBC shall have the right to purchase from SBLH a further 20 per cent of the outstanding ordinary shares of Standard Bank Plc for cash, which option is exercisable from the second anniversary of Completion on the terms set out in paragraph 5.3 of this Circular; International Financial Reporting Standards; Merrill Lynch International (Registration number ), a company incorporated in England; 7

10 Investment Banking JSE JSE Listings Requirements Joint Reporting Accountants and Auditors Last Practicable Date Law/s Longstop Date Loss or Losses m Material Adverse Change Material Shareholder MOI the business (whether currently conducted or not) of originating and entering into loans and related financings (including term lending, structured debt finance, syndicated lending or distribution, securitisation and property finance but not including lending in respect of commodities trading or securities trading in the OA Global Markets Business), assisting, arranging debt (bond and related derivative) issuance for clients and providing advice and recommendations in respect of the suitability and execution of financing and corporate transactions and related restructuring (including mergers and acquisitions, initial public offerings, capital raisings, privatisations, and corporate restructurings but not including in respect of commodities trading), and includes support, administration and origination services of Standard Bank Plc to the extent the services are wholly or mainly performed to assist or support such activities; JSE Limited (Registration number 2005/022939/06), a public company with limited liability duly incorporated in accordance with the laws of South Africa and which is licensed to operate as an exchange under the Financial Markets Act; Listings Requirements of the JSE, as amended from time to time; KPMG Inc. (Registration number 1999/021543/21) and PricewaterhouseCoopers Inc. (Registration number 1998/012055/21), both private companies duly registered and incorporated with limited liability in accordance with the laws of South Africa, being the joint independent reporting accountants and auditors of Standard Bank Group in terms of the Proposed Transaction; Monday, 17 February 2014, being the last practicable date prior to the finalisation of this Circular; any and all laws, decrees, rules, regulations, codes, directives, resolutions, communications, ordinances, orders, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any competent Governmental Authority; the date falling 12 months from the date of signature of the Sale and Purchase Agreement, 29 January 2015, which may be unilaterally extended by up to 90 days by either ICBC or SBLH in the event of the other party failing to comply with its obligations, or such later date as the Parties may agree; any and all losses, liabilities, actions and claims, including charges, costs, damages, fines, penalties, interest and all legal, experts, consultants and other professional fees and expenses and excluding, in each case, any tax; million; any change in the circumstances existing as at 29 January 2014 which will or is reasonably likely to have a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) and/or results of operations of the Standard Bank Plc Group, the detailed provisions of which are set out in paragraph 5.7 of this Circular; a Shareholder who holds 10 per cent or more of the Shares in the issued share capital of the Group, as defined in the JSE Listings Requirements; the Memorandum of Incorporation of Standard Bank Group adopted by special resolution at the annual general meeting of Standard Bank Group Shareholders held on Thursday, 31 May 2012; 8

11 Moody s NAV NAVPS Net Assets NewCo Non-Resident OA Global Markets Business Parties Post Completion Audit PRA Principal Investment Management Moody s Investors Service Limited or any successor thereto; net asset value; NAV per Share; the amount of the aggregate consolidated net assets of the Standard Bank Plc Group as at the Completion Date expressed in US$; an entity, or entities, controlled by Standard Bank Group or any of its subsidiaries to be established for the purposes of, amongst other things, acquiring and conducting the Excluded Business; person not ordinarily resident in South Africa; the business of Standard Bank Plc and the Affiliates which: (i) is engaged in the global markets for investments in Global Markets Products (as defined, but which for clarity includes commodities, fixed income, currencies, credit and equities products); providing investment, trading and hedging services (both on an agency and principal basis) to clients in respect of such products and associated administration of the aforementioned services; (ii) provides market prices to clients in respect of Global Market Products and provides services in respect of physically delivered, cash settled and derivative forms of Global Markets Products both through the use of an exchange and not through the use of an exchange ( over the counter ); (iii) undertakes research, analysis of published information, creating and managing the application of investment and trading strategies and sales functions in respect of Global Markets Products; (iv) is engaged in principal trading in respect of Global Markets Products and related management of positions; (v) provides to investors and invests in money market investment products, in respect of liquidity or yield enhancement, on a principal basis (including interest bearing accounts, term deposits (fixed and floating rate), tradeable fixed deposits, call and term loans); (vi) provides financing, risk management services, physical purchase and advisory services to clients in respect of Global Markets Products; (vii) manages exposures of Standard Bank Plc resulting from the activities in (i) to (vi), and includes support, administration, treasury and origination services of Standard Bank Plc to the extent the services are wholly or mainly performed to assist or support the activities in (i) to (vii); the parties to the Transaction Documents being Standard Bank Group, SBLH and ICBC; an audit of the Standard Bank Plc Group to be carried out on the Net Assets by Standard Bank Plc s auditors (failing which an accounting firm of similar experience and international standing) after Completion in accordance with principles articulated in the Sale and Purchase Agreement; UK Prudential Regulation Authority (and any successor(s) from time to time); the business unit within Standard Bank Plc and the Affiliates which has been discontinued and which previously conducted principal investment activities, including the investment of capital of the Group in, and management of, direct investments in and funds investing in private equity, real estate and distressed debt (including portfolios of nonperforming loans); 9

12 Proposed Transaction Purchase Price or Consideration R or Rand or ZAR Rating Downgrade Register Relevant Proportion Sale and Purchase Agreement SARB SBLH SENS Service Unit Share/s or Standard Bank Group Shares Shareholders or Standard Bank Group Shareholders Shareholders Agreement South Africa the acquisition by ICBC of a controlling interest in Standard Bank Group s OA Global Markets Business, through the acquisition of 60 per cent of the ordinary share capital of Standard Bank Plc, the ICBC Call Option and the Standard Bank Put Option, subject to the terms and conditions incorporated in the Transaction Agreements as detailed in this Circular; the price payable by ICBC to SBLH in terms of the Proposed Transaction as determined in the manner set out in paragraph 5.2 of this Circular; South African Rand, the official currency of South Africa; (a) the long-term, unsecured, unsubordinated debt of Standard Bank Plc being rated below investment grade by both Moody s and Fitch; and/or (b) the short-term unsecured, unsubordinated debt of Standard Bank Plc being rated below investment grade by both Moody s and Fitch; the register of Certificated Shareholders maintained by the Transfer Secretaries and the sub-register of Dematerialised Shareholders maintained by the relevant CSDPs in terms of section 50 of the Companies Act; (a) 60 per cent; and (b) for the purpose of a claim in terms of the indemnities as set out in paragraph of this Circular, the percentage of the total equity share capital of Standard Bank Plc held by ICBC and any subsidiaries at the relevant time; the written agreement entered into between Standard Bank Group, SBLH and ICBC on 29 January 2014 in terms of which ICBC will acquire 60 per cent of the ordinary share capital in Standard Bank Plc through the Proposed Transaction; the South African Reserve Bank, which includes both the Financial Surveillance Department and the Banking Supervision Department; Standard Bank London Holdings Limited (formerly Standard Bank London Holdings Plc) (Registration number ), a company incorporated in England and Wales and a wholly owned subsidiary of Standard Bank Group, being the seller in terms of the Proposed Transaction; the Stock Exchange News Service of the JSE; division of Standard Bank Plc comprising workers whose roles comprise wholly or mainly the rendering of services to Standard Bank Group subsidiaries other than Standard Bank Plc and its subsidiaries; ordinary shares of 10 cents each in the share capital of Standard Bank Group listed on the JSE; holders of Standard Bank Group Shares; shareholders agreement in agreed form to be entered into between Standard Bank Group, SBLH, Standard Bank Plc and ICBC on Completion; the Republic of South Africa; 10

13 Standard Bank Standard Bank Group Standard Bank Plc Standard Bank Plc Group Standard Bank Put Option Strate TNAV TNAVPS Transaction Agreements Transaction Documents Transactional Products and Services The Standard Bank of South Africa Limited (Registration number 1962/000738/06), a company incorporated in South Africa, acting herein in its capacity as investment bank and transaction sponsor to Standard Bank Group in terms of the Proposed Transaction; Standard Bank Group Limited (Registration number 1969/017128/06), a public company with limited liability duly incorporated in accordance with the laws of South Africa and all subsidiaries and other undertakings; Standard Bank Plc (Registration number ), a company incorporated in England and Wales including its Branches and representative offices, being the primary legal entity used by the OA Global Markets Business; Standard Bank Plc, its wholly owned subsidiary Standard Resources (China) Limited (a company registered in Shanghai, China with approval certificate Shang Wai Zi Hu Du Zi Zi (2003) No.3345) and each of the Affiliates, which will upon Completion be subsidiaries of Standard Bank Plc; the option right, contingent upon ICBC exercising the ICBC Call Option, that Standard Bank Group would have to require ICBC to acquire its residual shareholding after such exercise, on the terms as set out in paragraph 5.4 of this Circular; Strate Limited (Registration number 1998/022246/06), a company duly incorporated in accordance with the laws of South Africa which is a registered central securities depository in terms of the Financial Markets Act, and which manages the electronic clearing and settlement system for transactions that take place on the JSE and off-market trades; tangible net asset value; TNAV per Share; collectively, the Sale and Purchase Agreement and the Shareholders Agreement; the Sale and Purchase Agreement, the disclosure letter thereto, the Shareholders Agreement, the amended articles of association of Standard Bank Plc, the legal agreements necessary to effect the Proposed Transaction, including any other legal agreements necessary to effect the re-organisation as set out in paragraph 5.1 of this Circular; transactional banking products and services in respect of cash and account management, trade services and investor services and includes provision of bank accounts and management facilities, payment services and collection systems, management of existing liquidity (not including lending), guarantees in respect of trade finance, documentary credits and confirmations in respect of trade financing, foreign bills of exchange and bills discounting, settlement, safekeeping and custody of assets, securities lending, corporate trustee services, investment administration (accounting, compliance and reporting) and online platforms for account management, equity trading and money market activities, payment administration and account balances, and includes support, administration and origination services of Standard Bank Plc to the extent the services are performed to assist or support such activities; 11

14 Transfer Secretaries UK USD or US$ VAT Computershare, the transfer secretaries of Standard Bank Group in South Africa and Transfer Secretaries Proprietary Limited (Registration number 93/713), a company duly incorporated in accordance with the laws of Namibia, being the transfer secretaries of Standard Bank Group in Namibia; United Kingdom; United States Dollar, the official currency of the United States of America; and value added tax, payable in terms of the Value-Added Tax Act (Act 89 of 1991), as amended. 12

15 Standard Bank Group Limited (Incorporated in the Republic of South Africa) (Registration number 1969/017128/06) South African Share Code: SBK ISIN: ZAE SBKP ZAE (First preference shares) SBPP ZAE (Second preference shares) Namibian Share Code: SNB ISIN: ZAE JSE bond codes: SBS, SBK, SBN, SBR, ETN series, SSN series and CLN series (all JSE listed bonds issued in terms of The Standard Bank of South Africa Limited s Domestic Medium Term Note Programme and Credit Linked Note Programme) Directors of Standard Bank Group Independent non-executive Tshamano Mohau Frederik Phaswana (Chairman) Douglas Denoon Balharrie Band Richard Matthew Wingfield Dunne Thulani Sikhulu Gcabashe Koosum Parsotam Kalyan Adv. Kgomotso Ditsebe Moroka Andrew Christoffel Nissen Myles John Denniss Ruck Lord Robert Haldane Smith Peter David Sullivan Edward Malcolm Woods Non-executive Kaisheng Yang (Joint Deputy Chairman) Sakumzi Justice Macozoma (Joint Deputy Chairman) Wenbin Wang Executive Barend Johannes Kruger (Group Chief Executive Officer) Simpiwe Kenneth Tshabalala (Group Chief Executive Officer) Simon Peter Ridley (Group Financial Director) CIRCULAR TO STANDARD BANK GROUP SHAREHOLDERS 1. Introduction and purpose of this Circular Shareholders are referred to the announcement released on SENS on Wednesday, 29 January 2014 and published in the South African press on Thursday, 30 January 2014, whereby Shareholders were advised that SBLH had entered into the Sale and Purchase Agreement in terms of which ICBC will, upon Completion, acquire a controlling interest in the Group s OA Global Markets Business, by acquiring 60 per cent of Standard Bank Plc, subject to the implementation of a series of steps to constitute the Standard Bank Plc Group as the platform for a focused Global Markets business. The OA Global Markets Business, which is the subject of the Proposed Transaction, includes commodities, fixed income and currencies, credit and equities trading. Standard Bank Plc is currently wholly owned by Standard Bank Group through an intermediate holding company, SBLH. As the focus of the Proposed Transaction is to create a Global Markets joint venture with ICBC, the Group will, prior to the Proposed Transaction, inter alia, transfer the Excluded Business into NewCo, close certain Standard Bank Plc representative offices and transfer the Affiliates to Standard Bank Plc, in order to constitute the Standard Bank Plc Group as a focused Global Markets business prior to ICBC s investment. 13

16 The Proposed Transaction creates the unique and commercially compelling opportunity for the Standard Bank Group and ICBC to partner in Global Markets. Through introducing ICBC as majority shareholder, the partners are creating a new and larger commodity and financial markets platform and expanding the strategic emphasis for the OA Global Markets Business to include a focus on China, by becoming part of China s leading banking group. The Proposed Transaction also presents an opportunity to realise proceeds on disposal that will release a significant amount of capital for the Group from its operations outside Africa, which can be effectively deployed in furthering the Group s growth strategy in South Africa, and across the African continent subject to requisite approvals. Key aspects of the Proposed Transaction are as follows: i. ICBC will acquire 60 per cent of Standard Bank Plc from SBLH on Completion, for cash, as set out in paragraph 5.2 of this Circular, establishing the platform for a Global Markets partnership between ICBC and Standard Bank Group; ii. iii. ICBC will be granted the ICBC Call Option to acquire a further 20 per cent of the outstanding ordinary shares of Standard Bank Plc for cash, exercisable for a five-year period, from the second anniversary of Completion; and contingent upon ICBC exercising the ICBC Call Option, and from six months after such exercise, SBLH will have a five-year option to require ICBC to acquire its residual shareholding in terms of the Standard Bank Put Option for cash. Having regard to ICBC s shareholding in Standard Bank Group of 20.1 per cent, the Proposed Transaction is classified as a related party transaction, as defined in the JSE Listings Requirements. The purpose of this Circular is to provide information to Shareholders to enable them to make an informed decision as to whether or not they should vote in favour of the ordinary resolutions to be proposed at the General Meeting to implement the Proposed Transaction. The General Meeting has been convened in terms of the notice of General Meeting for Friday, 28 March 2014 at 09h00 or at any other adjourned or postponed time and date determined in accordance with the provisions of the Companies Act (as read with the JSE Listings Requirements), at which the Shareholders will consider and vote on the resolutions required to implement the Proposed Transaction. 2. The Global Markets business within Standard Bank Group Global Markets is a business unit within the Group s Corporate and Investment Banking business. Global Markets transacts Global Market Products through customer-driven, market-making and sales activities across the full spectrum of traded financial and commodity risk. It seeks to originate exposures directly from clients or market-making activities, which are repackaged and traded with market participants, asset managers and other clients through the Group s distribution network. A comprehensive range of foreign exchange, money markets, interest rate, credit, equity and commodity products are provided, ranging from simple risk management tools to structured products. The Global Markets business expertise extends to the management and financing of physical commodity inventories across base and precious metals. The Group s African Global Markets businesses work closely with the OA Global Markets Business to originate and distribute African Global Markets Products, and will continue to do so, on an arm s length basis, after Completion. The Global Markets business within CIB in Africa is not included in the Proposed Transaction and will remain with the Group after Completion. The OA Global Markets Business (operated primarily from Standard Bank Plc and the Affiliates) is the focus of the Proposed Transaction. 3. Rationale Standard Bank Group commenced banking operations in London in 1992 as Standard Bank London Limited, which served as the hub for the Corporate and Investment Banking Division s expansion into emerging markets outside South Africa. In June 2005, the bank s name was changed to Standard Bank Plc. Standard Bank Plc grew from its African roots to be a significant player in emerging markets commodity and financial market trading. Standard Bank Plc is authorised and regulated by the UK PRA and the FCA. Standard Bank Plc has Branches in Dubai, United Arab Emirates; Hong Kong, Special Administrative Region of China; Tokyo, Japan; and Singapore and representative offices in a number 14

17 of locations, of which only Shanghai, China remains relevant to the Group s strategy, and the other representative offices are in the process of being closed. Standard Bank Plc is a member of, inter alia, the London Bullion Market Association, the London Metal Exchange, the London Platinum and Palladium Market and the London Stock Exchange Plc. Standard Bank Plc has, in common with many international investment banks since the global financial crisis that prevailed from 2007, experienced significant challenges in adjusting its business model to both the profound changes impacting the global financial services industry. This was further exacerbated by the Group s change of strategy away from building a Global Emerging Market banking group to focus primarily on Africa. These challenges include reduced revenue opportunities following the divestiture by the Group of several other businesses in countries outside Africa, (notably Argentina, Russia and Turkey), the impact of defaulting exposures (particularly in the Middle East) dating back to the global financial crisis, and a high and relatively inflexible cost base. Standard Bank Plc has reported losses for the past three financial years, including a loss attributable to equity shareholders of US$332.4 million for the financial year ended 31 December 2012, and reported a profit of US$6 million for the half year to 30 June In line with other actions undertaken to restructure the Group s international business and thereby allocate capital and other resources to delivering on its refined African strategy, the Group has implemented a number of initiatives and taken substantive action to reduce both the risk profile and the cost base of Standard Bank Plc and other operations outside Africa. In this process, the Group has retained the key capabilities outside Africa which enable its strategic objectives of facilitating and enhancing the Group s competitive positioning in, for and across Africa, and in natural resources. Notwithstanding the intensive rationalisation and de-risking that has been undertaken in Standard Bank Plc and the Group s operations outside Africa, the cost base and capital requirements remain dilutive to the Group s returns, and Standard Bank Plc and Standard Bank Group would both benefit greatly from an opportunity to share the cost base and capital requirements of Standard Bank Plc with a powerful partner who could introduce new and substantial sources of revenue. Today, the OA Global Markets Business performs an important role in allowing Standard Bank Group to access the global capital markets to facilitate growth and development in Africa, and in maintaining the Group s position as a significant financial market participant in commodities trading. Given the investment over many years, the platform has the potential to create considerably more value through growing its franchise and generating incremental revenues from a wider spectrum of opportunities than are currently available to it given Standard Bank Group s narrower strategic focus on Africa. The Proposed Transaction creates the unique and commercially compelling opportunity for the Group and ICBC to partner in Global Markets. Through introducing ICBC as majority shareholder, the partners are creating a new and larger commodity and financial markets platform and expanding the strategic emphasis for the OA Global Markets Business to serve Chinese clients needs by becoming part of China s leading banking group. China is the world s largest consumer of natural resources, its corporations and financial institutions are expanding rapidly beyond its borders, and it benefits from robust economic growth. China is also the world s second largest economy and has one of the fastest growing traded currencies in the world, the Renminbi. These, in combination with the powerful client relationships that ICBC has, present the OA Global Markets Business with exciting franchise and revenue growth opportunities, while maintaining the role it performs for Standard Bank Group s African business. The partnership, between China s and Africa s largest banks, is unique in banking and reflects the fact that the direct linkages generally between Emerging Market ( EM ) economies, and China and Africa in particular, are increasingly important contributors to the global economy. It is intended that Standard Bank Plc and its subsidiaries will be renamed after Completion to reflect the changed ownership of the OA Global Markets Business and a further announcement in this regard will be made once finalised. The Group will need to transfer from the Standard Bank Plc entity, and the Affiliates, activities that do not form part of the OA Global Markets Business that is the subject of the Proposed Transaction. These activities include Investment Banking, Transactional Products and Services and Principal Investment Management and the Service Unit. The assets relating to these activities (defined as the Excluded Business ) comprised approximately 2 per cent of Standard Bank Plc s total assets at 30 June The NewCo successor entities into which these activities will be moved will require appropriate regulatory approval so that these activities can continue to play an important role in the Group s African Corporate 15

18 and Investment Banking business. From a contractual perspective, the Excluded Business includes liabilities relating to the ownership, conduct and operation of certain non-core representative offices of Standard Bank Plc that are to be closed prior to Completion. ICBC has been the Group s strategic partner since 2008 and the two groups have co-operated on a wide range of initiatives in Africa and other emerging markets, with a particular focus on growing trade and investment flows between China and Africa. The Proposed Transaction also presents an opportunity to realise proceeds on disposal that will release a significant amount of capital for the Group from its operations outside Africa, which can be effectively deployed in furthering the Group s growth strategy in South Africa and across the African continent. 4. Categorisation and related party transaction ICBC currently holds 20.1 per cent of Standard Bank Group s Shares and as such, is considered to be a Material Shareholder of and a related party to Standard Bank Group in terms of the JSE Listings Requirements. The Proposed Transaction is categorised as a Category 2 and related party transaction in terms of the JSE Listings Requirements. Those Directors of the Group who represent ICBC on the Board have been recused from all Board discussions in respect of the Proposed Transaction. In the case of a related party transaction, the JSE Listings Requirements require that, inter alia, the Board confirms whether the Proposed Transaction is fair insofar as the Shareholders are concerned and that the Board has obtained an opinion from an independent professional expert acceptable to the JSE. As such, Merrill Lynch has been appointed as an independent professional expert by the Board to determine whether the financial terms of the Proposed Transaction are fair insofar as the Shareholders are concerned and to provide the required fairness opinion. Their fairness opinion is set out in Annexure 1 of this Circular. ICBC and its associates, who are entitled to attend and participate at the General Meeting, may, if they are present in person or by proxy, be taken into account for the purposes of determining a quorum at the General Meeting. However, in terms of the JSE Listings Requirements, the votes of ICBC and its associates, will not be taken into account in determining the results of the ordinary resolutions referred to in the notice of General Meeting. 5. Salient Terms of the Proposed Transaction Set out below are the key elements of the Sale and Purchase Agreement and Shareholders Agreement as they pertain to the Proposed Transaction. 5.1 Standard Bank Plc Group re-organisation In order to provide ICBC with the opportunity to invest in a focused international OA Global Markets Business, a number of corporate re-organisation steps need to be undertaken as a condition to Completion. The material steps of this re-organisation are set out and explained below. NewCo or other Standard Bank Group entities will acquire or take transfer of all of the assets, liabilities and employees of the Excluded Business from the Standard Bank Plc Group prior to Completion. Such transfer shall include: i. the Transactional Products and Services business; ii. the Investment Banking business (the assets of which were already significantly reduced and de-risked during 2011 and 2012); iii. iv. the Principal Investment Management business and all special purpose entities relating to the Principal Investment Management business; either (a) the transfer of all assets, liabilities and employees of Standard Merchant Bank (Asia) Limited relating to the Excluded Business if Standard Merchant Bank (Asia) Limited is to be acquired by Standard Bank Plc or (b) the transfer by Standard Merchant Bank (Asia) Limited of its Global Markets business to the Singapore branch of Standard Bank Plc (see below); and v. the transfer of the functions, systems and people of the Service Unit. 16