Come December 13, shareholders of the Industrial and Commercial Bank of China, ICBC, will decide if the bank should commit investor’s money to buy a one-fifth share of Africa’s largest bank, South Africa’s Standard Bank Group Limited, SBGL.
Based on Standard Bank’s issued share capital on October 23, the Chinese bank has concluded arrangements to acquire 20 per cent of the enlarged share capital of SBGL amounting to R36.67 billion (42.31 billion Hong Kong dollars).apart from the ICBC shareholders, the deal also has to be approved by the South African Registrar of Banks, the China Banking Regulatory Commission, the Johannesburg Stock Exchange and Standard Bank’s shareholders. The ICBC is reported to be the world’s largest bank by market value. Standard Bank’s share price on the Johannesburg Stock Exchange rose by 6.05 per cent in response to the new deal but the bank had issued a cautionary announcement that negotiations are still under-way.
Standard Bank said it viewed China as a key component of its long-term strategy, given its increasing economic linkages to the African continent and its acknowledge material impact on global economic growth, adding that both banks hoped to “lay the foundation for significant expansion in Africa. SBGL, which operates in 38 countries, 18 of them in Africa, described the deal as the “largest foreign direct investment” into South Africa, and a “landmark transaction” for the continent. The partnership would place the bank “at the cross-roads of economic interaction between China and the African continent, “it said.
However, there are indications that the country’s central bank, the Reserve Bank of South Africa would limit ICBC’s stake in SBGL to about 25 per cent, but Standard Bank maintained that foreign ownership, which currently stood at about 40 per cent, leaving the bank being mainly owned by South Africans.
