Barclays Plc has agreed to pay Barclays Africa $988 million (Sh102.4 billion) to fund investments needed for it to split from its African business, paving the way for the British bank to cut its stake to below 50 per cent.

Barclays is in the middle of an overhaul that includes cutting its holding in the African business as part of broader plan announced a year ago to focus on the United States and Britain.

In a statement issued shortly after releasing its annual results on Thursday, Barclays Africa said the money would be used to invest in technology, re-branding and other separation related projects.

The agreement requires approval from the South African central bank and the finance minister, Pravin Gordhan.

For Barclays Africa, Africa’s third largest bank by market value, the split allows it manage its own business on the continent.

“It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation,” Barclays Africa’s chief executive Maria Ramos said.

The bank’s 5 per cent rise in annual profit fell short of forecasts as higher interest rates at home and sluggish growth elsewhere on the continent hit consumption and investment spending.

The South African bank said diluted headline EPS came in at 17.69 rand (Sh141.3) in the year to end December.

This was slightly below the 17.95 rand (Sh143.38) estimate by Thomson Reuters’s Star Mine Smart Estimates, which puts more weight on recent forecasts and those from historically accurate analysts.

Headline EPS is the primary measure of profit in South Africa that strips out certain one-off items.

Barclays Africa, along with rivals, has struggled to increase lending as slowing economic growth in many African markets tempers demand from corporate clients and rising interest rates at home hit consumption by retail customers.