French Bank Societe Generale and South Africa's Absa joined forces in Africa on Friday, partnering on corporate and investment banking to broaden their reach across the continent.
The agreement will lead to a closer relationship between the two after Absa, one of South Africa's biggest lenders, split from its former parent, Britain's Barclays, in 2017. t
It will see them leveraging one of the second complementary geographic footprints and product positions, with Absa strong across South and East Africa and SOCGEN also established in West and North Africa.
"We mirror each other very well," Nothando Nebebele, head of financial institutions group at ABSA's corporate and investment bank, told Reuters by phone, adding that it would be difficult to find another bank with that track.
ABSA has set up a series of targets as it tries to make a name for itself as a pan-African, standalone bank.
It made the arrangement a bigger share of its clients, and helped meet its 6-12% share of banking revenues in Africa.
Indeed, in a statement, SOCGEN Chief Executive Officer Frederick ODA has said it is committed to developing increasingly sophisticated banking needs as continent-based firms.
The banks will also work together to serve Chinese firms on the continent – a lucrative market. Absa will also buy SOCGEN's South African business offering custody, trust and clearing services for an undisclosed price.
ODEA is trying to boost profitability at SOSGEN through exiting countries and businesses where it lacks critical size and capacity for synergies.
The company has seen Sokgen sell banks in Albania, Belgium, Bulgaria and Serbia. The bank seeks to release banks as much as 5% of its weighted assets, or close to 17.5 billion euros ($ 19.96 billion).
Richard Southern, Head of Wholesale Money Management at ABSA's corporate and investment bank, told Reuters the cost of the South African purchase was not material for ABSA, but filled a hole in his offering.
Co-operating with SOSGEN, also, Alerted concerns absa would not be able to serve its multinational clients, or would be able to compete with larger players, after its separation from Barclays, said Patrice Rassou, chief of shackles in Sanlam Investments, a top ten investor in Absa .
But Jan Meintjes, Portfolio Manager at Denker Capital and another Absa Investor, said the benefits might not materialize, and Absa said the "Bigger Problems" worsened its bottom line.
"The retail and commercial banking terrorist business, only from a relative size point of view, is where the bulk of the value unlock may be," he said.
Aba's shares were down at 0.14% at 1330 GMT, while SocGen's shares were up 0.4%. ($ 1 = 13,8205 rand) ($ 1 = 0.8769 EUR)