Standard Chartered has announced that it will buy the African custody business from Barclays Bank. The business has gross assets of 1.9 million and assets under custody of 3.8 billion. The details of the deal, formulated over a period of 12 months, were not disclosed.
According to Chris Wooldridge, head of Securities Services, Barclays Africa: We reached a point where the business has grown and become valuable. However we are not large in custody, and we reached a time to do what we did with the global custody business 13 years ago, and exit from the African custody business.
According to a statement released from Barclays, the custody business in Africa is profitable but would benefit from the synergies a global operation could provide. It is better for Standard Chartered to take the business forward, concluded Wooldridge.
Barclays African custody business covers 16 markets from its operations in eight countries (Botswana, Ghana, Kenya, Mauritius, Tanzania, Uganda, Zambia and Zimbabwe).
Standard Chartered has promised that all jobs are guaranteed.
According to Karen Fawcett, group head of Transaction Banking at Standard Chartered: This deal will enable Standard Chartered to rapidly develop our custody capabilities in our core markets across Africa. We are already seeing ongoing demand for regional and international investment services across this region. With this acquisition, we will enhance our custody offering and continue to gain a strong foothold as Core Bank to our clients in Africa.
What remains of interest will be the role of sub-custodians within the region. First National Bank, National Bank of Malawi, Socit Gnrale and Citi all have sub-custody relationships with Barclays relationships that may come under threat when Standard Chartered begins to review its new purchase.
The deal may also strengthen Standard Chartereds position as an attractive bank for Chinese clients. Standard Chartered prides itself on its relationship with China, and recently announced the expansion of its global markets team in China by up to 40% by 2012. Creating an efficient financial bridge from China to Africa could only improve Standard Charterds position in the region. In 2008, China-Africa trade volume reached $106.8billion, according to Chinese government figures.
Standard Chartered also purchased First Africa (an African M&A advisory business) in 2009 and opened a new representative office in Angola, its fourteenth African market, in early 2010.