Absa gets ready to return to the custody and services market

ABSA IS SET to re-establish itself in the custody and services market after it agreed to acquire Société Générale’s custody, trustee and clearing services operated in South Africa, for an undisclosed amount.

Absa said that it has agreed to acquire the related activities conducted by Société Générale, which includes its client portfolio, IT systems and all the employees dedicated to these activities.

However, the transaction is still subject to the approvals of the relevant authorities, which are anticipated to be obtained by end of 2019.

“The securities lending and borrowing services are not part of the transaction and will be terminated by end of March 2019,” the group said.

Absa chief executive Maria Ramos said the acquisition supported their growth strategy in Africa. “The transaction allows Absa to re-establish a firm foothold in the custody and trustee services market and provides us with the opportunity to expand our offer to corporate clients in South Africa. Our strategic intent is, in time, to provide these services across markets where we have a presence,” Ramos said.

The sale is in line with Société Générale’s strategic plan, whose primary objectives are to focus on markets where it can generate potential synergies with other group businesses.

Société Générale has a strong position in Africa, with presence in 19 African countries, mainly in Western and Northern Africa, enabling the bank to offer its clients the expertise of an international bank combined with the proximity of its local banking networks.

Absa is one of Africa’s largest diversified financial services groups with a presence in 12 countries, mainly in southern and eastern Africa.

In addition to the acquisition, the two banking giants have also signed a memorandum of understanding to roll out commercial agreement and expand their activities through the development of a pan-African wholesale banking offering.

The partnership will leverage on Société Générale and Absa’s geographical complementarity and combined strengths to reinforce their expertise and offer a wider range of banking products and services to international and domestic corporate clients and financial institutions with operations in Africa.

Absa said the partnership would also enable them to boost client coverage beyond their own traditional markets through an extended offering across 27 countries in Africa.

Société Générale chief executive Frédéric Oudéa said joining their forces through this agreement made perfect sense to accompany the economic development of the continent.

“Large African companies and multinational groups present in Africa have increasingly sophisticated banking needs and require expertise that was mostly delivered in more mature economies,” Oudéa said. The groups said the agreement includes a combined offering dedicated to Chinese companies operating in Africa.

“Société Générale has established China business desks at 11 of its local subsidiaries to service Chinese clients in Africa. As part of Absa’s international and China strategy, the group will be rolling out China service desks in key African countries to complement its desk in South Africa. These desks will allow Absa to extend its strong local offering to Chinese multinational corporates.”

Absa shares closed 0.20 percent higher at R174.59 oin the JSE on Friday.