Standard Bank has a $1.35 billion war chest for
international acquisitions that will initially target
commercial and retail banks in Nigeria, its deputy CEO Ben
Kruger said on Thursday.
The comments are a sign that South Africas largest
lender is gearing up for regional expansion after the credit
crunch slammed the brakes.
Our biggest priority in our banking expansion
plans is the hot Nigerian market, he told Emerging
Markets in a telephone interview. He said a working group
has been set up to search for targets.
The banking group at headquarters level has capital of $1
billion for international expansions, including Nigeria. This
would complement the $350 million of excess capital in its
Nigerian unit, Stanbic IBTC Bank Plc, that could be used to
fund acquisitions into the country.
A collapse in the Nigerian stock market last year triggered
a margin-lending crisis and a collapse in the banking
The government is now leading a consolidation of the
financial sector. In an interview with Emerging
Markets on Wednesday, Nigerian central bank governor
Lamido Sanusi said the governments planned Asset
Management Company, which will buy toxic assets, will receive
legislative approval in two weeks.
Kruger revealed that he has lobbied the central bank and
government for Standard to be the favoured foreign lender in
the consolidation process, citing the banks
history, experience and risk management.
But a final clean-up of the banking system pending success
of the AMC is a precondition for the push though Kruger
was confident this would materialize.
At present, Standard Bank only has 300,000 customers in
Nigeria, compared with millions each at local competitors
Intercontinental and First Bank. South Africas First Rand
could also provide Standard with a run for its money in its
push into Nigeria.
Kruger said that acquisition of a retail bank would provide
crucial access to a local customer base that is
more difficult to achieve through organic growth. Separately,
Standard Bank, which has 100 branches in Nigeria, plans
organically to double its branch network to penetrate all 36 of
Nigerias states over the next 18 months.
As Emerging Markets reported this week,
Renaissance Capital, Russias largest investment bank,
plans to ramp up its balance sheet in Africa: it plans to be
active in 21 countries in the region by the end of the
Kruger said RenCaps avowed push poses a threat to its
investment banking operations. But the South African
lenders balance sheet strength and full-service corporate
franchise would provide risk mitigants to clients such as
trade financing and hedging products will provide a competitive
He added that Standards partnership with Industrial
and Commercial Bank of China would service Chinese corporate
and state clients active in Africa. This year, the partnership
has generated three transactions worth $5 billion.
He said there are up to 70 potential commodity-focused deals
in the pipeline, and that Standard Banks 33% acquisition
of Russias Troika Dialog in 2009 had created a business
stream that is now connecting Chinese clients active in Russia
South Africa contributed 75% of Standard Banks profits
in 2009 but Kruger said the profitability of regional units
could comprise 50% of the total in the coming years.