Standard Bank, Africa’s largest lender, considers M&A for growth

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Standard Bank, Africa’s largest lender, considers M&A for growth

12:51 CAT | 20 Jan 2024

Image: Blomberg

Standard Bank Group Ltd. would consider doing an acquisition as it seeks to gain a greater foothold in East Africa, a region that’s been aided by increased ties to the Middle East.

The lender will first prioritize growing its market share organically, Sim Tshabalala, chief executive officer of Standard Bank, said in an interview with Bloomberg Television’s Haslinda Amin at the World Economic Forum in Davos.

“We’re also looking to look at buying market share in appropriate parts of the competitive environment, like for example where people are selling their books,” Tshabalala said. “We’re looking at opportunities to partner with others, and indeed we look for judiciously priced and appropriate opportunities to make acquisitions where they make sense.”

With 3.03 trillion rand ($161 billion) in assets as of June, Standard Bank is Africa’s biggest lender. The company already has a presence in 20 African nations as well as in the US, China, United Arab Emirates, Isle of Man, Jersey and the UK.

East Africa’s economy has been expected to expand faster than other regions on the continent, aided by public spending on infrastructure, a push by governments to diversify their economies beyond agriculture and deeper regional trade. Countries like Kenya and Tanzania are expected to have some of the best-performing economies in the world this year.

“The first thing to do there is to grow organically, look for opportunities for our clients, look at what they’re buying, help them to make those acquisitions, look at the projects that they’re executing, help them to finance them, help them to raise the capital that they need, help people as they build,” Tshabalala said.

Both Nedbank Group Ltd. and FirstRand Ltd., which compete with Standard Bank in their home market of South Africa, are moving to capitalize on the rapid economic growth that’s transforming many other countries on the continent. Both banks already have units in west and southern Africa, and they want to establish bigger footholds in the east.

Election expectations

Tshabalala expects South Africa’s ruling party, the African National Congress, to remain in power during the country’s upcoming elections, either by winning an outright majority or by being able to control the coalitions that may be formed in the aftermath.

“If the ANC gets above 50%, we will have policy certainty,” Tshabalala said. “If it is below 50% and it has a coalition, because it is such a large party, we still think there will be a consistent policy trajectory.”

Investor sentiment has been dampened by expectations that election results might push the ANC to form a coalition with the populist Economic Freedom Fighters, the third-largest party in the 2019 vote and a group that advocates for the nationalization of banks, mines and land.

“South Africa has strong institutions and one can be certain that the policies executed will be rational and we are pretty confident that that will be the case,” Tshabalala said.

Source: Bloomberg