Standard Bank, South Africa’s biggest bank, last month took what joint CEO Sim Tshabalala calls its "most significant strategic action" since announcements four years ago that it would refocus on Africa, reversing a pan-emerging markets strategy.
Industrial and Commercial Bank of China, the group’s biggest shareholder, with a 20.1% holding, has agreed to buy a controlling interest in Standard’s London-based global markets business for $765 million in cash: 60% of the audited net asset value of Standard Bank plc, Standard Bank’s UK subsidiary, less $80 million.
ICBC will have a five-year option to purchase a further 20% of Standard Bank plc, exercisable two years after the deal is completed, while Standard Bank will also have a put option, exercisable after ICBC’s option is exercised, to sell the remaining 20% for cash.
The deal follows sales over the past two years, including a 36% stake in Russian investment bank Troika Dialog for $370 million and a majority stake in a Turkish securities joint venture, Standard Unlu. Standard Bank also sold an 80% stake in its Argentine operations to ICBC in 2012 for $600 million.
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| Sim Tshabalala, joint CEO, Standard Bank |
Standard Bank retains 25% of Standard Unlu and 20% of the Argentine operations. But Tshabalala says the sale of Standard Bank plc "is the biggest of the post-2010 disposals" within the refocus on Africa. "It’s the most significant strategic action we’ve made pursuant to the announcements we made in 2010." Out of Africa
ICBC is buying a business that includes commodities, fixed income, currencies, credit and equities products and operations in New York, Dubai, Singapore, Shanghai, Hong Kong and Tokyo. It excludes Standard Bank’s operations outside Africa in corporate, transactional and investment banking.
In a statement, Standard Bank said the global markets business could continue to service its clients in Africa. But the bank has been looking to release capital from its London operations, while it continues to invest in the rest of Africa, particularly in retail.
"We are paying up for [expansion in the rest of Africa] now so that in five to 10 years’ time we’re well positioned," says Tshabalala.
