Societe Generale and the Ecobank-Nedbank alliance, are two major players preparing for growth in African transaction banking in the next decade.
The China-Africa bank connection is hardly news – but it is growing.
Eight years ago Chinese banking giant ICBC bought a 20% stake in South Africa’s Standard Bank.
In 2014 it bought a majority of London-based Standard Bank Plc, which specializes in currency trading, commodities, stocks and bonds. In the interim, progress toward Africa-wide transaction banking for Chinese customers has moved forward slowly.
But two recent developments promise to increase the velocity. Societe Generale’s Christian Behaghel, director of global transaction banking, told Global Finance at Sibos that SocGen’s acquisition of a 65% stake in Mauritius Commercial Bank Mozambique, will strengthen its ties with present and future Chinese businesses in the country that are developing Mozambique’s natural gas reserves, which are the third largest in the world after Russia and Qatar.
Seizing a piece of the growing cross-border China business in the next decade is definitely part of the rationale behind the alliance between Ecobank and Nedbank.
In a long-expected deal, the latter took a 20% shareholding in Ecobank in October 2014, converting a $284 million loan into an equity stake. The alliance gives the two entities one of the most formidable banking footprints in Africa south of the Sahara.
Ecobank has a presence in 36 African countries, greatly expanding Nedbank’s reach outside of South Africa.
The alliance has put together an “African Champion Banking Network,” which offers a range of corporate banking services, including cash management and transactional banking, supply chain and trade finance and digital solutions.
It has introduced Ecobank Omni, a pan-African corporate banking platform, with tools available to improve the visibility of cash and payment flows.
Patrick Gutmann, group head for transaction services at Ecobank, says the bank opened a representative office in Beijing in 2012.
It’s too early to tell to what degree a presence in China will capture business on the back of trade flows directly from the mainland to Africa.
But within Africa, Gutmann said Ecobank is offering a single platform across countries to companies like telecom giant Huawei, and building its digitization platform.
The latter is a must in east Africa, where mobile banking first developed and now allows multinationals to gain access to transactions in the unbanked hinterland.
“It’s a virtuous cycle,” says Gutmann. “Customers can pay without cash. This means that the companies suddenly have a larger market, giving customers access to goods and services never available before.”
“Our common platform will prove an advantage to companies that are spreading their own footprint on the continent,” Gutmann said.