Standard Chartered Bank’s recent move to acquire the South African custody business of Absa Bank in South Africa is a clear indication of the bank’s strong determination not to leave the promising African banking market to chance. In a press statement, the bank said this is part of a wider Africa strategy. Standard Charted is only one among several global companies that have intensified their African Business Strategies as the continent quickly becomes a business destination that no one wants to ignore. Part of a popular Africa tailored Coca Cola ad says “it’s time for Africa”. Another part says ‘there are a billion reasons to believe in Africa’. These ‘billion’ reasons include among others the fact that Africa has a huge population that is still unbanked. Several single businesses are transitioning to SME status where banking is a vital element of the business. These are definitely some of the signals that have motivated the likes of Standard Chartered to ensure they stand to be counted when the party heats up.
The custody business has always played the role of allowing clients to conduct wholesale banking by deepening the bank –client relationship as well as providing liquidity to its clients in an efficient manner. The bank’s acquisition of this custody business will enable the group to efficiently generate good links with its customers thus creating more room for expansion.
This acquisition comes shortly after an earlier acquisition of Barclays Africa’s custody business which happened in the year 2010. The bank acquired and transferred the operations of the business from Dubai to South Africa’s capital, Johannesburg.
Vibrant Growth Rate
Diana Layfield, the bank’s chief executive officer for Africa said that the decision to buy the custody business is aimed at improving the range of services it offers to its clients in the region. She said this is one of their management strategies to support the organic growth of the bank.
The bank’s growth rate has been improving over a period of time with 15% increment over the past five years in its operating zones. Diana Layfield explained that it was a great achievement for the bank to acquire such business from Absa as it will help quicken their aim of expanding in South Africa. She revealed that the bank was planning to start two other branches in South Africa’s second and third largest cities, Cape Town and Durban respectively.
Ebby Essoka, South Africa’s CEO talked of how good they felt as a company to achieve commendable expansion at such a rapid pace in terms of growth in market share. “This is a very exciting week for the standard chartered bank in south Africa. Plans to acquire this custody business and the announcement to start two new branches in the country means we are extending our services and getting more clients.” He said in the press release.
The acquisition of the custody business comes at a time when the bank is planning to celebrate 150 years since its birth in Africa. The celebration will come at the end of this year (2013). Currently it is operating in more than 16 countries with more than 170 branches in Africa as a continent.
Kenya is among the bank’s best performing countries with a market share of 34%. It is followed closely by South Africa at 28% and Ghana with a market share of 20%.
The other countries hosting the standard chartered bank branches include Botswana, Cameroon, sierra Leon, Nigeria, Tanzania and Uganda.
The bank’s first African branch was opened in South Africa in 1862. It was opened by John Peterson who located it in Cape Town. The bank slowly moved to Port Elizabeth and Johannesburg. It then expanded its links to southern, central and eastern Africa. By 1965, it was operating in West Africa in countries like Gambia, Cameroon, Ghana and Nigeria
The bank is promising to take its African Business to another level within five years, and they may well be encouraged by the thinking that there are a billion reasons why this is possible for the bank’s African investments.