Absa enters Chinese market with a nonbanking subsidiary
Banking group Absa has opened a nonbanking subsidiary in Beijing, making a foray in the key Chinese market as the group ramps its international expansion.
Absa CEO Arrie Rautenbach said the office, which will be launched officially in May, will enable the group to support domestic Chinese clients who are in pursuit of deals in Africa.
“We’re thrilled to add our office in China to our global footprint,” Rautenbach said in a statement.
“Today’s announcement reinforces our ambition to grow our international strategy — particularly as China is such a strategically important market for Africa. Our expansion into this dynamic market represents an exciting opportunity to unlock new avenues of growth and prosperity for Africa and China.”
The announcement was attended by finance minister Enoch Godongwana and Chen Xiaodong, the Chinese ambassador to SA.
Rauntenbach said that the move was part of a “wider commitment by Absa to expand its operations with international representative offices in strategic markets and offer deep expertise in African markets to its overseas clients.”
In recent months, the lender has been reorganising its international portfolio. Absa announced in November that it was on the verge of buying the Mauritian assets of Hongkong and Shanghai Banking Corporation (HSBC) for an undisclosed amount, pending regulatory approval, as part of its strategy to grow its retail and business banking offering in the country.
The deal will see HSBC sell its wealth, personal and banking operation in Mauritius to Absa’s subsidiary in the country. The deal includes about 38,000 customers.
Charles Russon, CEO of Absa corporate and investment bank, said trade between China and Africa had surged over the past few decades, fuelled by Chinese investment in Africa’s natural resources and infrastructure projects. Busson said that had created huge commercial opportunities for both regions.
“Our presence in China will help to firmly establish Absa’s capability to provide general advisory services to clients based in China for concluding transactions across the African continent, offering us new opportunities with our clients in the region,” said Russon.
“Establishing our base there will not only give us a physical presence in the region but also help us to meet the needs of our clients operating in this rapidly growing market.”
Trade between SA and China in particular has grown exponentially since the formation of Brics, with this growth expected to accelerate following several announcements regarding trade at the Brics Summit held in Johannesburg six months ago.
Chinese companies signed deals to buy SA products worth about $2.2bn. Official data from China shows that bilateral trade between China and Africa stood at $282bn in 2022.
In 2021, China pledged to import African products worth $300bn by 2025 and increased the number of African products that qualified for tariff-free trade with China.