FirstRand’s strategy to grow its corporate and investment banking proposition has received regulatory approval for a transaction whereby the group will take transfer of the clients, the banking assets and liabilities and the employees of HSBC’s branch in SA.
In September last year, British multinational bank HSBC became the latest offshore banking giant to decide to exit SA as international players battle to establish a presence in a market local lenders dominate.
HSBC said last year it would transfer its clients and banking assets and liabilities to FirstRand and smaller rival Absa. Its SA branch employees would be transferred to FirstRand.
“The clients of HSBC SA are mainly subsidiaries of multinationals operating in SA and some large domestic corporates, and therefore the transfer will be led and implemented by FirstRand’s corporate and investment (CIB) banking franchise, Rand Merchant Bank (RMB),” FirstRand said on Tuesday.
This will ensure that the transferred HSBC clients will have continued access to corporate and investment banking services in SA, it said.
HSBC’s multinational clients headquartered outside SA will be able to continue to have connectivity through HSBC’s global digital channels for account visibility and payment initiation for their SA accounts once they have transferred to RMB. HSBC SA will serve its branch clients until the transfer of the business is completed, FirstRand said.
“The transaction fits with RMB’s strategy to scale its corporate banking business and increase its share of multinational clients operating in SA,” RMB CEO Emrie Brown said.
FirstRand will allocate the required capital to back the transferred risk weighted assets, which meets the group’s financial resources allocation principles.
The transaction is expected to be completed at the end of October.
HSBC Group established a presence in Sub-Saharan Africa in 1981 before entering the SA market the year after the country’s transformation to a democracy. It comprises HSBC Bank’s Johannesburg branch, HSBC Securities and a representative office for the private bank.
The bank’s principal activity in SA was providing banking services to its corporate and wholesale clients, it said.
Some international players have found the going tough in gaining scale and market share in SA’s corporate investment and banking, which is dominated by domestic champions — in the main Standard Bank.
French multinational BNP Paribas last year wound down its corporate and investment banking services in SA, ending its 12-year presence in Africa’s largest economy.
The Reserve Bank granted BNP, the Eurozone’s biggest bank, permission in 2012 to set up a branch in SA.
As a result, the lender upgraded its representative office into a fully fledged commercial branch, offering corporate and investment banking services. BNP had bought a controlling stake in the stockbroking arm of Cadiz Holdings a year earlier.
BNP holds leading positions in Europe with its corporate and investment banking and investment solutions activities. It also has a strong presence in the Americas and is rapidly expanding operations in Asia.
With Kabelo Khumalo
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