‘No Standard Bank business links to money laundering’
We will continue the process of reconfiguring our distribution capabilities in South Africa Sim Tshabalala Standard Bank chief executive officer
STANDARD Bank Group Ltd said there was no reason to believe any of its businesses were linked to alleged money laundering involving Troika Dialog even though it owned a stake in the Moscow-based lender until 2012.
None of the entities that the Johannesburg-based company was involved in at the time have been mentioned in reports about the scandal, Alan Bedford-shaw, the head of corporate development, said on a conference call this week.
Africa’s largest lender bought 36% of Troika – at the time Russia’s largest independent investment bank – in September 2009, combining the business with its existing operations in the country.
Standard is being dragged into the fray as almost daily revelations from the Organised Crime and Corruption Reporting Project and its partner news organisations widen the group of lenders involved in the scheme.
The so-called Troika Laundromat was a financial network set up to help clients move money out of Russia and hide it.
Standard Bank agreed to sell Troika to Sberbank PJSC in 2011 in a $1billion deal as part of a strategy switch to focus on Africa alone and exit emerging markets from Turkey to Brazil.
The rejigged focus has paid off for Standard, with a jump in earnings from its 20 operations outside its home market helping to compensate for almost zero revenue growth and rising costs in South Africa. The pan-african businesses contributed 30% of revenue and posted a 19% increase in adjusted earnings in the period to December.
The bank’s African footprint
“adds diversification and enhances growth opportunities,” said Philip Richards, a banking analyst at Bloomberg Intelligence.
While it’s beholden to South Africa, he added, modest economic improvements could be expected this year and a return on equity ratio of 18% and strong capital levels provided “a buffer against shortterm earnings pressure.”
The stock fell 3.6%, the most since October 23, as revenue missed average analyst estimates. It was the biggest decliner in the six-member FTSE/JSE Africa Banks Index, which was hit by rand weakness and rising bond yields after South Africa’s current account gap widened.
Standard knows “we need to do a lot more to improve” the cost-toincome ratio, said chief executive officer Sim Tshabalala.
“For instance, we will continue reconfiguring our distribution capabilities in South Africa” while reducing the number of branches and the floor space of outlets and pushing customers towards digital channels. | Bloomberg