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Standard Bank |
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Citi |
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Citi |
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Barclays |
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Rand Merchant Bank |
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Standard Bank |
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Access Bank |
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Standard Chartered |
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Best bank in Africa
Over the last 12 months, Africa has struggled through a number of difficulties. Sudden drops in commodity prices have affected natural-resource exporters such as Angola and Nigeria; currency volatility in countries from Nigeria to Zambia followed, and central banks across the region were forced to hike interest rates.
Nigerian banks – some of the most developed in the region – have remained resilient so far. But analysts argue that there could be risks bubbling under the surface. The country is reliant on the oil and gas sector, which has started to wobble as a result of subdued commodity prices, so nonperforming-loan ratios may start to tick up when audited results for the first half of 2015 become available, analysts say.
Add to this the fact that certain Nigerian banks do not meet the minimum capital adequacy ratio of 10% for regional banks under Basel II regulations, and Nigerian banks could find themselves running into trouble. Luckily, in March of this year, the Central Bank of Nigeria extended the deadline for the introduction of the capital adequacy ratio under Basel II by 15 months, now due to come into effect in June 2016.
Meanwhile, South African banks, which, on the whole, maintain strong capital positions, continue to show resilience at home and in the wider region. Standard Bank in particular, led by joint chief executives Ben Kruger and Sim Tshabalala, has some of the best results in the sector over the last year. Indeed, the group maintained its strong capital position with tier 1 and total capital at 12.9% and 15.5% respectively, satisfying regulatory requirements.
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Sim Tshabalala. Standard Bank has had some of the sector’s best results this year |
Normalised headline earnings for the group saw a modest increase by 1% to R17.32 billion ($1.46 billion), up from R17.19 billion in 2013, while headline earnings from continuing operations were more impressive, increasing 20% to R21.07 billion in 2014 from R17.61 billion in 2013. Over the same time, profit for the year from continuing operations rose 32% to R22.2 billion and total assets for the group rose by 13% to R1.9 trillion. Standard Bank is Africa’s largest bank in terms of assets.
Most telling of Standard Bank’s commitment to the continent, however, was its decision to sell 60% of the bank’s London-based operations to Industrial and Commercial Bank of China in February 2015. Proceeds from the transaction will be deployed in furthering the group’s growth strategy in South Africa and the rest of the continent. Meanwhile, the strategic partnership between ICBC and Standard Bank will strengthen the group’s activities in China and Asia.
Standard Bank also increased the number of its retail customers in 2014; in South Africa numbers rose from 11.8 million to 12.7 million and in the rest of Africa from 3.8 million to 4 million. As more time and investment from the bank goes into Africa, Standard Bank’s footprint is sure to become stronger.
In a constantly evolving investment banking landscape, banks with strong regional networks and international expertise that can flawlessly work across borders are most likely to succeed. Often, the race for best investment bank in Africa is a close battle between regional and international players such as Barclays, Deutsche Bank and Standard Bank.
Best investment bank in Africa
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Miguel Azevedo, Citi: benefitting from on-the-ground presence |
This year, Citi, with 16 on-the-ground teams across the continent and a presence in 40 out of 54 African countries, wins the award for best investment bank in Africa. Citi’s investment banking business under guidance from Miguel Azevedo, head of investment banking for Africa, boasts a wide selection of deals across a variety of African countries.
In debt, Citi has worked on a number of high-profile Eurobonds in Africa and has been able to help achieve excellent results for issuers. In July 2014, for example, Citi worked on Senegal’s $500 million Eurobond with a coupon rate of 6.25%, 250 basis points below the sovereign’s last Eurobond in 2011.
Citi has also worked on both Côte d’Ivoire’s latest Eurobonds. The first, a $750 million issue in July 2014, marked Côte d’Ivoire’s come-back to the global debt capital markets with a yield of 5.375%. The second was a $1 billion Eurobond in February 2015 that achieved a 6.375% yield despite difficult market conditions at the time.
Citi has also worked on a variety of deals for the Nigerian banking sector including a $400 million bond for Access Bank, a $450 million bond for First Bank of Nigeria and a $200 million loan for Diamond Bank, all completed within the awards period.
In Islamic finance, a product that is gaining ground within sub-Saharan Africa, Citi arranged Senegal’s debut sukuk in July 2014, alongside the Islamic Corporation for the Development of the Private Sector. The CFAFr100 billion ($208 million) sukuk was issued over four years and at a coupon of 6.25% and kick-started Senegal’s ambitions to become a regional Islamic finance hub.
In M&A, Citi has worked on transactions worth more than $9 billion, securing a 20% market share in 2014. The bank has worked on high-profile deals across the continent, as adviser to furniture company Steinhoff International on its acquisition of Pepkor for $5.7 billion in November 2014 and in June 2014 as adviser to Lafarge on the merger of its Nigerian and South African businesses, a deal worth $1.35 billion.
In December 2014, Citi also acted as adviser to the Asset Management Company of Nigeria (Amcon) on the institution’s divestment of Enterprise Bank, its first divestment of the nationalised bridge banks.
Best equity house in Africa
Citi’s success in investment banking across the board was further highlighted by the bank’s prevalence in Africa’s equity capital markets over the last 12 months, making Citi Euromoney’s best equity house in Africa for the second year running.
In one of the most important deals for Africa in 2014, Citi acted as joint bookrunner for oil and gas company Seplat’s dual listing on the Nigerian and London stock exchanges. The $500 million IPO of ordinary shares was heavily oversubscribed, with an order book supported by long-term investors. The IPO was the largest for a sub-Saharan company since Kenya’s Safaricom listed in 2008.
In South Africa Citi acted as underwriter, bookrunner and mandated lead arranger on the R25 billion ($2 billion) syndicated bank facilities put in place to finance an acquisition by Woolworths of David Jones, the Australian retailer, that gives the Cape Town-based retailer an international platform.
Citi also worked on Atlas Mara’s follow-on offering in July 2014 for $300 million, which added to the $325 million raised by the company’s IPO in December 2013. The cash will be used to support the growth of BancABC, the Botswana-based bank in which the group – founded by former Barclays chief executive Bob Diamond – bought 50.1% in April.
Best debt house in Africa
Sovereign Eurobond debuts continue to be a strong theme in Africa’s debt capital markets, and Barclays has worked on a variety of high-profile issues covering various geographies over the last 12 months.
Most notably, Barclays acted on Kenya’s inaugural Eurobond in June 2014 with Standard Bank, JPMorgan and Qatar National Bank. The $2 billion issue – the largest to date for an African sovereign, excluding South Africa – was spread over two tranches and was more than four times oversubscribed, with an order book of $8.8 billion. The five-year, $500 million bond priced at 5.875% and the 10-year $1.5 billion issue priced at 6.875%.
In September 2014, Barclays acted as transaction advisers on Ghana’s $1 billion Eurobond, the bank’s second mandate for the country in a deal oversubscribed 2.9 times. In April, the bank worked on Zambia’s $1 billion Eurobond, four times oversubscribed and with a coupon of 8.5%.
In Kenya, Barclays priced a KSh5 billion ($5.1 million), 12.25% three-year fixed-rate note for East African Breweries Limited (EABL) with an order book of KSh9 billion under its newly established KSh11 billion medium-term note programme.
Best M&A house in Africa
In African M&A, South African firms are leading activity as slower growth at home forces them to look abroad. Taking advantage of this trend, South African stalwart, Rand Merchant Bank has excelled, working on some of the country’s most high-profile M&A deals in the period under review.
In November 2014, RMB advised Brait and Pepkor on Steinhoff’s acquisition of the latter, culminating in the largest non-resources M&A transaction in South Africa.
In June 2014, RMB acted as joint book runner for Mediclinic’s R3.2 billion ($258 million) equity raise in June 2014 to fund acquisitions in Switzerland and the UAE. The capital raise was 11% of free-float market capitalization, yet the book closed with R5.3 billion of demand in just three hours. The investment bank is also acting as financial adviser and sponsor to Mediclinic on the acquisitions.
Best risk adviser in Africa
This year, Standard Bank returns as Africa’s best risk adviser after Standard Chartered took the award in 2014, in particular because of the bank’s central role in hedging debt associated with South Africa’s Renewable Energy Independent Power Producers Programme (REIPPP) in the first quarter of this year, a role the bank has had since the programmes came into play in 2011. In 2015, Standard Bank has taken the lead in engaging with the relevant government bodies and adding value to the REIPPP execution process.
Because of the size and tight time frame associated with the programme, this was an unprecedented transaction for the South African market. A combination of Standard Bank’s experience in dealing with large-ticket transactions, risk appetite, strong distribution channels and structuring capabilities allowed it to handle the projects in a manner that limited adverse market impacts.
In equity, Standard Bank provides execution and risk solutions for cash equities, derivatives and equity research linked to emerging and frontier markets. Standard Bank’s cash equities offering includes online trading, stock broking services, research and trading services to institutional clients.
SBG Securities, the bank’s equities brokerage business, includes African brokerage houses in Nigeria, Ghana, Uganda, Kenya and South Africa, giving clients access to 22 African equity markets through one sales, trading and research portal.
Best flow house in Africa
South African and non-regional players usually dominate when it comes to the award for best flow house in Africa, but this year, the award goes to Nigeria’s Access Bank, led by CEO Herbert Wigwe.
While Access Bank may not be as established in terms of flow compared with some of the South Africa banks, it is a worthy winner because of the progress it has made over the last 12 months. Despite currency volatility in Nigeria, the bank has been able to continue developing flow operations as well as leverage the bank’s growing regional network to provide excellent service to customers.
Access Bank created its own online foreign exchange trading platform, AccessFX, in 2013, which enables importers in Africa to access the local currency of the country of import and immediately close out positions with Access Bank online and in real-time. Transactions executed on the platform in 2014 were in excess of $670 million across G10 currencies.
In 2014, Access Bank estimates it was responsible for 14.12% of the turnover of FX trades completed in Nigeria. Moreover, Access Bank executed a total of over $13.87 billion in client trades, covering spot trades and derivatives.
Access Bank is one of the five largest banks in Nigeria by shareholder equity, loans and deposits, and it is ranked as one of Africa’s top 15 banks by total assets and capital.
Best transaction services house in Africa
Meanwhile, in transaction services, Standard Chartered claims the award in this category in Africa for the second year in a row.
The bank has been able to differentiate itself from its competitors in the region with Vendor Prepay, a process where the bank purchases receivables from a vendor and prepays them on a without-recourse basis, which expanded to cover Uganda in January and Kenya in March 2015.
International corporates in the region also benefitted from the roll-out of liquidity management tools to more countries in Africa, including Nigeria and Kenya at the end of 2014, while Botswana and Ghana followed in March 2015. Clients can now pool their funds from these nations to the bank’s treasury centres abroad.
