Standard Bank to boost branch network through ICBC deal, could enter new segments

Monday, August 8, 2011

Standard Bank Argentina will leverage the Industrial and Commercial Bank of China's (ICBC) entry into its ownership to strengthen the branch network and maybe enter into new business segments, the Argentine bank's IR head, Marcelo Dupont, told BNamericas.

Last week, South Africa's Standard Bank announced the sale of its 55% stake in the local unit to ICBC for US$600mn.

Once regulatory approval is granted - expected to happen in the first half of 2012 - both parties will inject a combined US$100mn into the Argentine bank to fund future growth.

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ICBC will not interfere with Standard Bank Argentina's ongoing growth plans, which include expanding its branch network to 140 from 103 in 3-5 years, Dupont said.

Standard Bank will retain a 20% stake in the local unit, as it has been a profitable investment for the South African bank, Dupont added.

Standard Bank Argentina grew earnings 67% last year to 172mn pesos (US$41.4mn) thanks to strong loan and fee revenues, as well as lower provisions. It is Argentina's eighth largest private sector bank by assets and deposits.

The deal will also allow Standard Bank to cash in on Argentina's growing trade flows with China - the South American country's second largest trading partner - and help connect Africa with other emerging markets such as Brazil, Dupont said.

The sale is in line with Standard Bank's new plan of focusing its business exclusively on Africa.

Standard Bank had received a number of unsolicited offers for its Argentine unit, including one from ICBC, since December last year. The Chinese lender owns a 20% stake in the South African bank.


The purchase marks ICBC's entry into South America, the only continent where it does not operate, and is consistent with its strategy of following its corporate customers that are expanding outside of China into new markets.

"Although it's still too early to say in which segments Standard Bank Argentina will focus growth, ICBC has a portfolio of corporate customers in infrastructure, energy, natural resources and agribusiness that maybe want to invest here," Dupont said.

ICBC, one of the world's largest banks with a market cap of US$250bn, earlier this year announced a US$100mn investment to enter the Brazilian market and filed for a banking license in Peru.