Get more Mail & Guardian
Subscribe or Login

Last chance for foreign banks

The Reserve Bank is likely to shut the door on foreign ownership after two of the Big Four retail banks acquire a foreign partner, an analyst suggested this week.

“The question is, when does the Reserve Bank close the door on foreign ownership of local banks? Maybe after two of the Big Four are in foreign hands, maybe three? In the end it may be more of a political [and regulatory control] decision than a commercial one,” Leon Claasen, a director and banking specialist at CA Ratings told the Mail & Guardian.

Claasen spoke as fresh speculation that FirstRand was in discussions with Standard Chartered surfaced. Standard Chartered has denied this.

Last year Reserve Bank Governor Tito Mboweni indicated that several foreign banks were interested in buying local banks, adding that each bid would be evaluated on its merits. The Reserve Bank’s “four pillar” policy is aimed at preventing mergers between the Big Four commercial banks — Standard, Absa, Nedcor and First National Bank (FNB).

This does not necessarily preclude foreign ownership, provided foreign-owned banks comply with international and local banking regulations.

Mboweni welcomed foreign competition, saying it would strengthen the banking sector and benefit banking customers. But with Absa and possibly FNB likely to end up under foreign control, there is a fear that the Reserve Bank will shut the door on further foreign acquisitions in the retail banking sector.

“Barclays’ proposed bid for Absa increases the scarcity value of the remaining three commercial banks,” says Ed D’Almedia, head of the financial sector at Sanlam Investment Managers Absa is already spoken for, with Barclays expected to make an offer to buy 50,1% of Absa later this quarter.

That leaves just three of the Big Four as potential targets for foreign buyers. Standard Bank might be too large a morsel for any foreign bank, and a somewhat shop-soiled Nedcor, owned by Old Mutual, is reportedly not up for sale, though Coronation banking analyst Neville Chester says “at the right price, anything is for sale”.

That makes FNB, part of First Rand, the most likely acquisition target. HSBC and Citibank, which came close to buying BoE three years ago before being beaten to the punch by Nedcor, are also keen to expand their South African presence.

John Kivits, CEO of Standard Chartered South Africa, said the bank does not comment on market speculation, but it has made no secret of its intention to grab a bigger slice of the South African market after snapping up online bank 20twenty from Saambou nearly two years ago.

“Last year our group CEO Mervyn Davies made it clear that South Africa was an attractive market for us, but our number-one priority is to grow organically,” says Kivits.

Subscribe for R500/year

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and get a 57% discount in your first year.

Ciaran Ryan
Guest Author

Related stories

WELCOME TO YOUR M&G

If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here

Advertising

Subscribers only

R350 social relief grant not enough to live on

Nearly half of the population in South Africa — one of the most unequal countries in the world — is considered chronically poor.

More top stories

Afrobeats conquer the world

From Grammys to sold-out concerts, the West African music phenomenon is going mainstream

R350 social relief grant not enough to live on

Nearly half of the population in South Africa — one of the most unequal countries in the world — is considered chronically poor.

US fashion contaminates Africa’s water

Untreated effluent from textile factories in in Lesotho, Ethiopia, Kenya, Mauritius and Madagascar pours into rivers, contaminating the water

Deep seabed mining a threat to Africa’s coral reefs

The deep oceans are a fragile final frontier, largely unknown and untouched but mining companies and governments — other than those in Africa — are eying its mineral riches
Advertising

press releases

Loading latest Press Releases…
×