Fitch: Absa still on positive watch

Fitch Ratings said it is keeping South Africa-based Absa Group Ltd.'s and Absa Bank Ltd.'s ratings on Rating Watch positive following Barclays plc's (long-term AA+) announcement on Monday of its firm intention to acquire a majority stake in Absa and approval of the transaction by the South African minister of finance, Trevor Manuel.

The ratings were placed on watch on April 25 on expectations of the Barclays bid. Subject to Absa's acquisition by Barclays being completed on published terms, Fitch expects to resolve the the watch and upgrade the long- and short-term foreign and local currency ratings of both Absa and Absa Bank by a maximum two notches to levels above the sovereign ratings for the Republic of South Africa (rated foreign currency BBB/local currency A-).

Fitch said the rating action will reflect the enhanced level of support derived from Barclays' majority ownership, including the requirement for Barclays (rated AA+) to submit a letter of comfort to the South African Reserve Bank in terms set out by the Minister of Finance. The national ratings for Absa and Absa Bank will also be upgraded.

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