The Standard Chartered Group is considering selling its wealth and retail banking operations in Botswana, Uganda and Zambia. This is part of a continuing global restructuring that has seen it leave Zimbabwe and other African markets.
“The group is exploring the potential sale of its wealth and retail banking businesses in Botswana, Uganda, and Zambia. The group will concentrate its resources in these markets on serving the cross-border needs of global corporate and financial institution clients,” the bank announced Wednesday.
The bank built a US$40 million office complex in Zambia in 2020, and the local unit, in a separate statement, said if the wealth and retail banking arm is sold, it would remain in the country serving only investment banking clients.
Why are big banks going light on Africa?
Many large international banks are paring down their presence in Africa. Standard Chartered has been in Africa for 170 years.
In Zimbabwe, Standard Chartered sold its business to FBC Holdings for US$24 million. It also exited Angola, Cameroon, Gambia and Sierra Leone, and sold part of its Tanzania business.
Since 2016, Barclays has been selling some of its businesses on the continent. HSBC, another leading bank, is also reducing its footprint in Africa. French banks, including Société Générale and BNP Paribas, have taken similar steps to exit the African market in recent years.
Stricter regulation in Europe is part of the reason pushing large banks to pull back in Africa. Regulators are pushing banks to have bigger capital reserves, leaving them with less money to invest in high-risk emerging markets.
The risk is not matching the reward for many banks. In 2022, Standard Chartered said the African businesses that it was selling at the time accounted for just 1% of earnings. According to McKinsey, profitability in Africa’s five biggest banking markets – Egypt, Kenya, Morocco, Nigeria, and South Africa – has decreased by an average of 2% since 2016.
International banks are also facing stiff competition from more flexible local institutions. In West Africa, African brands such as Access Bank, which bought most of the banks StanChart sold in 2022, as well as Coris Bank, Zenith, UBA and EcoBank have eaten into the market share of international banks.
