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20 January 2006 Angelo Coppola

Standard Bank has launched the next phase of their broad-based BEE initiative, with plans to begin identifying some 250 SMEs that will ultimately become beneficiaries of the Tutuwa Community Trust.

Standard Bank has launched the next phase of their broad-based BEE initiative, with plans to begin identifying some 250 SMEs that will ultimately become beneficiaries of the Tutuwa Community Trust.

The first step in the process is for these groupings to complete a questionnaire and submit it to an independent third party.

The trust according to Jacko Maree, group CEO for Standard Bank was formed to benefit regional business and community development groupings, sharing in the share participation scheme on a 50:50 basis, with no initial upfront financial contribution required.

The shares will be allocated per province and will be based on a formula determined by the Financial and Fiscal Commission, which works independently for National Government and other provincial government structures.

The criteria for selection has been carefully determined and includes at least six provisos that have to be met, including being in good standing with SARS, 50% owned and controlled by black people, employed at least 10 people, and have an annual turnover of between R500k and R20m.

Maree does caution prospects that SMEs that have been operating less formally would find it difficult to meet these criteria.

In October the bank announced the BEE deal, effectively selling 10% of itself to their black partners in what was then effectively valued at R4bn. Since then the share price has run and the 10% is now valued at R7bn. These participation rights not shares per se are essentially discounted.

The shares are effectively locked-up until between 2011 and 2014, so there is a challenge to find sustainable groupings that will be around in five years time. Added to which the groupings have to remain black-owned until the shares vest. Added to which the groupings cannot use the shares they receive in any manner, as collateral or security, for example.

Maree says that the shares that will be allocated to these groupings are already deep in the money, based on current share price levels.

The Liberty Life group will be taking over the educational aspect of initial BEE transaction that was announced in October.

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