The relationship between the two banks goes back to 2008, when ICBC acquired a 20% stake in Standard, which has developed operations across 20 countries in Africa since its formation 126 years ago. In January this year, the Chinese bank strengthened its stake when it added a 60% stake in Standard’s London-based operation, which trades currencies, commodities, stocks and bonds.
Speaking to gtnews at the EuroFinance international cash and treasury management conference in Budapest, Hungary, David Jackson, executive of Standard’s Transactional Products and Services (TPS) International operation in London said that the bank decided that it was primarily a sub-Saharan bank. This was despite past ambitions to establish a presence in the emerging markets (EMs), which had seen the bank expand into Argentina, Brazil, Russia and Turkey.
Standard is now focusing closer to home, having set up a representative office late last year in Cote d’Ivoire with Ethiopia potentially to follow. “The global financial crisis forced banks to focus on what they should be doing, rather than what they’d like to do,” said Jackson. “While it’s good for Standard to have operations outside of Africa, there is very much our main market.”
Still an Unknown
Standard’s London operation has a full banking licence and is overseen by the Bank of England (BoE) and regulated by the Prudential Regulatory Authority (PRA). The new joint venture there between Standard and ICBC will be owned 40% by Standard and 60% by ICBC and will advise international corporates keen to establish operations in Africa.
“Multinationals are looking to the continent and noting the impressive growth figures, particularly in countries such as Nigeria, but for many it still represents a ‘big unknown’, suggested Jackson. “The attitude very often is one of ‘we need to be there, but how?'”
As many recent reports attest, Chinese companies have often been ahead of their western competitors, establishing a strong presence in African countries and offering funding for much-needed infrastructure projects. It is up to European corporates to determine how much they themselves wish to be present in Africa.
ICBC’s own thinking on strengthening their London presence is also likely to be influenced by the UK capital becoming a major renminbi (RMB) clearing centre. The Chinese bank has an option to increase its stake in the London j-v to 80% and while Standard renews the focus on its home market ICBC is very much looking to global market operations.
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