With growing trade between Africa and China, Standard Banks aims to take advantage of the growing economic links between both sides.
Standard Bank Group Ltd. is seeking to benefit more from the growing trade and investment between China and Africa, expanding its Africa business and looking for ways to cut spending outside the continent, it said Thursday.
“The biggest opportunity, the fastest growing opportunity, is the burgeoning Sino-Africa trade and investment relationship,” Deputy Chief Executive Sim Tshabalala said in an interview.
Standard Bank, Africa’s largest lender by assets, said earlier this year that it would realign the bank to put more resources in Africa while reducing businesses outside the continent that don’t feed into the Africa growth goal.
In 2009, China passed the U.S. to become Africa’s biggest trading partner. In 2011, Standard Bank estimates merger-and-acquisition activity from China on the continent totaled $5 billion, of which the bank said it advised on about 30%. Mr. Tshabalala said he expects investment from China to grow further in 2012 with a number of deals already in the pipeline that should be announced this year.
The Industrial & Commercial Bank of China Ltd. is a 20% shareholder in Standard Bank, with the latter aiming said to benefit more from that relationship.
Reducing balance sheets outside the continent will be “gradual,” said Jacko Maree, the bank’s group chief executive. In 2011 Standard Bank sold a majority stake in its Argentina operations to Industrial & Commercial Bank of China for $600 million. The sale is still in progress and subject to some regulatory approvals. The bank also completed a stake sale in Troika Dialog Group in Russia, for which it received an upfront consideration of $372 million.
“Where we get opportunities to shed investment bank or universal opportunities outside Africa, we will,” Mr. Tshabalala said.
As part of the bank’s aim to grow business with Chinese companies doing deals in Africa, it said it would increase its presence in Beijing and downsize in Hong Kong.
Recent Africa-China deals that Standard Bank advised on include the $1.3 billion Africa-focused miner Metorex Ltd. sale to Chinese nickel company Jinchuan Group Co. The bank also advised on the 25% stake sale of South Africa’s Shanduka Group to China’s sovereign-wealth fund China Investment Corp. for 2 billion South African Rand ($263.4 million), completed in December.
On Thursday, Standard Bank reported that net profit for 2011 rose 23% to 13.27 billion rand from 10.77 billion rand.
With the emergence of China as the worlds economic growth engine, there many opportunities to take advantage of. This is another sign of the growing importance that Africa will have economically.