/ 23 November 2007

Standard Bank sees stronger earnings from ICBC deal

Standard Bank expects as much as $200-million in incremental earnings by the third year of the deal in which China’s biggest lender ICBC will buy a 20% stake for $5,6-billion, it said on Friday.

Standard Bank said in a presentation on its website that the bank expects incremental earnings of $160-million to $200-million from the deal, China’s biggest investment in Africa yet.

Jacko Maree, Standard Bank chief executive officer, said in a televised shareholder presentation in Cape Town on Friday that the group will keep almost all the proceeds of the transaction outside South Africa, pending exchange control approval.

”We will try to keep almost all the money that we can outside of South Africa because it is earmarked for growth in Africa and growth outside of Africa,” Maree said.

South African and foreign shareholders will receive around $3,1-billion for selling their shares in the bank to ICBC. Marees said 75% of that figure will flow into South Africa to compensate local shareholders.

Standard Bank said about $450-million of the proceeds will be used for growth in existing markets and investments in key markets such as Kenya, Ghana and Angola.

”We see $450-million going into Africa to support accelarated growth in our existing markets and to build critical mass in a couple of key markets, the ones that are obvious at the moment are: Kenya, Ghana and Angola,” Maree said.

ICBC is buying an equal mix of new shares to be offered by the South African bank and existing stock from shareholders at prices that equate to a 15% premium to Standard Bank’s average stock price in the 30 trading days to October 23.

The transaction was first announced on October 25 and comes as Beijing encourages major state firms to expand abroad, particularly in developing countries.

Standard Bank shares were 1,34% higher at R109,95 by 9.14am GMT. – Reuters