BNP Paribas, the eurozone’s biggest bank, has wound down its corporate and investment banking services in SA, 12 years after launching its local foray.
This comes as the banking giant ramps up its 2025 strategic plan announced in 2022 that made the most of its noncore Africa operation with a focus on consolidating its European and Asian business.
The Reserve Bank’s Prudential Authority said in the Government Gazette that authorisation granted to BNP Paribas SA to conduct the business of a bank was withdrawn “with effect from March 8 2024”.
The Reserve Bank granted the French group permission in 2012 to set up a branch in SA in a move that caused the lender to convert its representative office into a full commercial branch offering corporate and investment banking services.
A year before being granted permission, BNP Paribas bought a controlling stake in the stockbroking arm of Cadiz Holdings.
In its corporate and investment banking (CIB) and investment solutions activities, BNP Paribas enjoys top positions in Europe, a strong presence in the Americas and solid and fast-growing businesses in Asia.
At the time, BNP Paribas, which has €2.6-trillion in assets, said the move would help it develop new clients in SA and the Southern African Development Community.
However, the Paris-based lender changed strategy in 2021 and announced plans to withdraw from most markets in Africa. At the time, the bank was present in SA, Algeria, Botswana, Namibia, Morocco, Senegal and Ivory Coast. The French banking group has since sold its subsidiaries in Burkina Faso, Mali, Guinea, Senegal, Tunisia, and Ivory Coast.
French banks, including Societe Generale and Crédit Agricole, have been decreasing their presence in Africa over the past decade.
Ratings agency Fitch said it expected further divestments in the next 12-24 months, and the French banks’ exit from African retail and commercial banking is slightly credit positive for them.
“They are refocusing on more mature retail banking markets in Europe and on activities such as insurance, leasing, and corporate and investment banking, where they can realise higher synergies,” said Fitch.
“Reduced presence in Africa also aligns better with their conservative risk appetite and efforts to optimise risk-weighted assets under European banking supervision, which is tighter than the local supervision for their African peers. Increasing economic uncertainties and heightened geopolitical tension in some African countries are also influencing their strategic reassessment.”
French and other multinational banks operating in Africa, particularly in retail and CIB, have to contend with established SA, Nigerian and Moroccan pan-African banking groups, with Standard Bank particularly dominating CIB. Fitch said increasing competition among pan-African banking groups should boost credit growth.
“French-owned African subsidiaries are often unable to target certain segments of the economy due to their parent bank’s conservative risk appetite, and they follow more stringent loan classification and provisioning policies than locally owned banks,” said the ratings agency.
“This can act as a drag on growth and profitability. Stricter capital management, with higher buffers over local minimum regulatory requirements, has also constrained subsidiaries’ lending. We expect credit growth to accelerate with the exit of French banks, albeit mainly in lower-risk segments, which will help preserve asset-quality metrics.”
Media reports in 2022 suggested BNP Paribas was looking for buyers for its SA personal finance business, RCS, which it acquired from TFG and Standard Bank in 2014 for R2.6bn.
The group did not respond to questions on whether the exit from the CIB business would affect its ownership of RCS.
RCS has about 2-million customers, and offers products including loans and insurance. It is also the largest provider of private label and co-branded retail card programmes in SA, with operations in Botswana and Namibia. Its debtors book stands at about R13.4bn.
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