United Kingdom: Standard Chartered acquires Absa custody business

The London-based lender brings Africa increase plans to bear as it ramps up its presence in the continent’s biggest economy. 

Standard Chartered will acquire the South African custody and trustee business of Absa Bank, as the emerging markets lender ramps up its presence in Africa’s major economy.

The London-based lender did not disclose the size of the transaction, but the acquisition will be financed internally and will not affect key ratios, a spokesperson told This is Africa. The purchase will improve the bank’s capacity to hold corporate clients’ securities for safekeeping, inclunding provide other back office functions for overseas investors on the continent.

“Africa is an significant strategic opportunity for the bank and for our clients, offering excellent economic increase and increasingly strong trade links with markets in Asia and the Middle East. This transaction will improve the range of services we offer to clients in the region,” Diana Layfield, CEO for the Africa region, said in a statement.

Standard Chartered has been investing heavily in South Africa, where it saw revenues grow by 28 % last year. Last week, the London-based lender announced that it will open two new wholesale offices in Durban and Cape Town to tap corporate clients operating across the continent. The group as well bought the African custody business of Absa’s parent company, Barclays, in 2010.

The lender plans to invest over $100m in new branches across Africa over the next three years, as well accelerating its investment in mobile payments technology in an effort to bring the roughly 75 % of adults without bank accounts into the economy.

The group is one of a number of banks ramping up their presence on the continent as they look to take chance of rising investment flows and sustained economic increase in the world’s most under-banked continent. Those include both international competitors like Citigroup, and local players such as South Africa’s Standard Bank, which operates in 18 nations on the continent, and Togo’s Eco Bank, which operates across 33.

The costs of building networks of branches and of investing in increase mean some of those groups have struggled to generate significant returns.

Standard Chartered’s Africa business has delivered average annual increase of 15 % for the completed 5 years, with revenues of $1.6bn in 2012. The group aims to double its Africa revenues over the next five years.