CEM REPORT | London listed bank, Standard Chartered PLC (“the Group”), in a release on its mother website, announced its full exit from seven Africa market.
The Group reveals the markets it intends to withdraw operations in full to be, Angola, Cameroon, Gambia, Jordan, Lebanon, Sierra Leone and Zimbabwe.
According to the release, the action is to redirect it resources to areas within region where it has better growth potential to better support it client.
“The Group announces a set of actions to redirect resources within its Africa and Middle East (“AME”) region to those areas where it can have the greatest scale and growth potential, in order to better support its clients.”
Although the Group in its release reveals the action to exit the intended markets is still subject to approval, it also plans to switch solely to Corporate, Commercial and Institutional Banking (“CCIB”) in two other African market.
“Subject to regulatory approval, the Group now intends to exit onshore operations in seven markets in AME and in a further two markets focus solely on its Corporate, Commercial and Institutional Banking (“CCIB”) business.”
“In Tanzania and Cote d’Ivoire, the Consumer, Private and Business Banking businesses will be exited and the focus will turn solely to CCIB.”
The Group hinted that the move may also as a result of low revenue from those market.
“The Group is currently present in 59 markets and serves clients in a further 83. The markets that will be exited generated around one per cent of total Group 2021 income and a similar proportion of profit before tax.”
Furthermore, the Group noted it investment in the AME region and it is also expanding its frontiers in fast growing economies within the region as it opened it first branch in Saudi Arabia and obtain approval for a banking license in Egypt.
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“The Group has invested heavily in recent years in the AME region including fundamentally transforming its digital capabilities in its African markets. It has also been expanding its footprint to cover some of the largest and fastest growing economies, having recently opened its first branch in the Kingdom of Saudi Arabia and obtained preliminary approval for a banking license in the Arab Republic of Egypt.”
Standard Chartered Group CEO, Bill Winters, said:
“As we set out earlier in the year, we are sharpening our focus on the most significant opportunities for growth while also simplifying our business. We remain excited by a number of opportunities we see in the AME region, as illustrated by our new markets, but remain disciplined in our assessment of where we can deliver significantly improved shareholder returns. Collectively, our actions will position the AME franchise for the next phase of growth after a very strong 2021 performance. We are grateful to our colleagues and partners in each of these impacted markets for their hard work and dedication and are committed to supporting them through this transition.”
Also, the Group said its actions are to accelerate its strategy to deliver efficiencies, reduce complexity and drive scale.
It further added that the focus still remains on serving its clients especially where it can make the most impact as it will also continue to serve corporate and institutional clients and facilitate cross-border capital flows and offshore business in all the above markets from its international network.
The Group further said there will be no change to how the Group reports these businesses for the first quarter 2022 results. Changes to their presentation will be shown at the half year 20221
Reuter said Standard Chartered is among the biggest European lenders to invest in the continent in recent years at a time when peers have been withdrawing.
The cuts would allow it to focus on bigger and faster growing economies in the region, such as Saudi Arabia where it has opened its first branch, and Egypt.
Prior to the announcement, StanChart operated in 15 African markets and 10 in the Middle East, employing around 15,000 staff, a major presence that had made it “unique among global banks” in the region, according to Citi analyst Yafei Tian.
But the complexity of operating at that scale left the bank with a comparatively high cost to income ratio of 74%, which exiting sub-scale markets will help to improve, Tian said.
Recall that earlier in the year Standard Chartered Plc, reportedly concluded plans to close down at least half of its Nigerian branches, to switch to digital banking.
In December of the previous year it had shut down some of its offices with an intention to reduce its 25 branches to 13, Bloomberg reports.