2010 Regional awards for excellence: Africa
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2010 Regional awards for excellence: Africa

The global financial crisis hit Africa hard, with the sub-Saharan region growing by just 2% in 2009. But the continent is bouncing back – the IMF expects growth in sub-Saharan Africa to be close to 5% in 2010 and 6% in 2011.

Awards for Excellence 2010


Best bank Standard Chartered
Best project finance house Standard Chartered
Best foreign exchange house Standard Chartered
Best risk management house Standard Chartered
Best investment bank Standard Bank
Best debt house JPMorgan
Best equity house Morgan Stanley
Best cash management house Citi

Country awards

Africa’s improving fortunes are mainly a result of strong Asian demand for the continent’s commodities. Trade between Africa and China has increased by around 10 times over the past decade.

South African lender FirstRand, for example, sealed a strategic cooperation agreement with China Construction Bank last July. FirstRand also signed a strategic cooperation agreement with India’s JM Financial in June. Meanwhile another South African group, Standard Bank, is building on its ties with Industrial and Commercial Bank of China, Standard’s biggest shareholder, as well as making alliances in other emerging markets.

African banks are building bigger operations across the continent. Standard Bank is expanding its network to markets such as Angola, and both it and FirstRand have expressed interest in acquiring one of the banks that failed the Central Bank of Nigeria’s audit last year.

But the bank best positioned to benefit from the links between Africa and Asia is Standard Chartered. Indeed, this year it wins our award for best bank in Asia too.

Standard Chartered advised India’s Bharti Airtel on a $9 billion acquisition of the Kenya-based, pan-African mobile telephone operations owned by Kuwaiti telecommunications firm Zain and completed in June. Standard Chartered also advised US oil firm Marathon on its $1.3 billion sale, completed in February this year, of part of its Angolan oil interests – assets that Chinese energy firms Sinopec and CNOOC had originally negotiated to buy, though Sonangol, the Angolan state oil firm, ultimately exercised its right of first refusal.

At group level, Standard Chartered is well capitalized – its tier 1 ratio was 11.5% at the end of 2009 – and its relatively small exposure to developed markets has shielded it from the worst of the global financial crisis. It has strengthened its Africa operations, raising its stake in Johannesburg-based pan-African M&A firm First Africa from 25% to 100% in July 2009. In early 2010 Standard Chartered agreed to buy the African custody business of Barclays.

Peter Sands, chief executive, Standard Chartered: well placed to tap Africa-Asia links

Peter Sands, chief executive, Standard Chartered: well placed to tap Africa-Asia links

Standard Chartered’s market share is also expanding in such areas as cash management, where aside from its own network of 160 branches in 14 African countries, it benefits from alliances for payments and collections with institutions including South Africa’s Nedbank and Togo-based Ecobank.

Like the other groups with large pan-Africa operations, Standard Bank’s earnings from Africa outside South Africa declined by 35% in 2009 while the share of profits from the region fell three percentage points to 10%. Standard Bank’s earnings in South Africa declined 17% in 2009. Customer loans fell 9% at group level in 2009 and customer deposits were down 7%.

Barclays’ revenue from external customers in Africa outside South Africa fell by 10% in 2009. Profits at Absa, Barclays’ South African subsidiary, declined by 25.5%. Total loans to Barclays’ customers in Africa declined by 7.4% and deposits in customer accounts fell by 4% in 2009.

In contrast, Standard Chartered’s overall profits in Africa were up 54% from 2009 to $482 million, a record rise for the group. Its loans to customers increased by 11% to $4 billion and deposits in customer accounts were up 22.5% to $7.2 billion. Net interest margins improved to 4.8% in 2009 from 4.5% in 2008.

In terms of investment banking, however, Standard Bank’s consistency across product lines is most impressive. Only Barclays, Citi, JPMorgan and Standard Bank can boast top-10 league table positions between April 1 2009 and March 31 2010 for bookrunning in both the equity and debt capital markets in Africa, according to Dealogic. Of these four banks, only Standard Bank and JPMorgan advised on a top-10 M&A deal completed in the period, and only Standard Bank and Barclays were top-10 arrangers in the loans table for the same period.

Standard Bank was bookrunner in the biggest single-tranche bond issue of the year, the Republic of South Africa’s March 2010 $2 billion 10-year deal, and it was lead manager for Cape Town’s R2 billion ($263 million) 15-year local currency bond, the largest bond ever issued by a municipality in the South African market.

Standard Bank also advised Finnish refining firm Ruukki in its $240 million acquisition of South African chrome producer Mogale Alloys, the largest industrial deal of the year in African M&A and one of only nine African M&A deals valued at more than $200 million to be completed in the 12 months to March 31.

Standard Bank stands out for extending its range of investment-banking products across the continent rather than focusing solely on the core South African market. In equities Standard Bank offers access to no fewer than 15 African markets. It also offers custody services in 12 countries.

Standard Bank’s Nigeria subsidiary, Stanbic IBTC, was the only member of a foreign group to lead manage an equity offering between April 1 and March 31. The $147 million rights issue for Cadbury Nigeria came during a year when the country’s stock exchange was one of the worst performers in the world.

Standard Bank acted as issuing house in local-currency bonds for Lagos and Imo states in Nigeria, for equivalents of $330 million and $122 million respectively. In Mauritius, the bank arranged a $50 million five-year Kingdom Hotel Investments deal and managed a $15 million three-year bond for Central Electricity Board, while its Kenyan and Namibian subsidiaries successfully issued bonds for $16 million and $28 million respectively.

In Dealogic’s table of the top debt capital markets bookrunners for the 12 months to March 31, JPMorgan, which takes the best debt house award for Africa, was a very close second after Standard Bank in deal volume and deal numbers. But the US bank was bookrunner on one of the two biggest bond issuances: Republic of South Africa’s May 2009 $1.5 billion bond, maturing May 27 2019. In August the same bookrunners helped the state access another $500 million on the same terms and with the same maturity date, and as a whole the deal at the time constituted the sovereign’s biggest-ever dollar issuance.

JPMorgan was also bookrunner in the biggest non-government deal of the year, a dual-currency $1.5 billion five-year bond for South African paper firm Sappi in July. This helped open the market for high-yield issuers in South Africa. JPMorgan advised Sappi on the structure of a $1.65 billion financing plan, which in addition to the bond included a €600 million bank re-financing.

JPMorgan was also sole deal manager in Côte d’Ivoire’s $2.3 billion Brady bond exchange. The transaction was a big step forward for Côte d’Ivoire, which had been in default since 2000.

In equity, Morgan Stanley had the biggest market share, according to Dealogic. It was bookrunner on the top three equity deals in the awards period. It was also joint global coordinator and joint bookrunner in Africa’s biggest IPO of the year, the $201 million offering for Optimum Coal Holdings at the end of March. This was also the only IPO of the year in South Africa.

Morgan Stanley was joint bookrunner on the $650 million convertible bond offering for mining firm AngloGold Ashanti, a transaction that garnered $4 billion in demand and was increased from its initial launch size of $575 million.

Morgan Stanley’s Africa equity franchise benefits from a sales, trading and research agreement with FirstRand. Outside South Africa, however, the firm was joint global coordinator and joint bookrunner on the $885 million listing on the London Stock Exchange of African Barrick Gold, a Tanzanian subsidiary of the Canadian mining company. African Barrick Gold also intends to seek a listing in Tanzania.

In mergers and acquisitions, many banks advised on one or two large deals, usually in South Africa, but none stood out as having advised on a large number and volume of M&A deals across the continent.

In project finance, the lead of Standard Chartered is much clearer. It was easily the top bank in market share and number of project financings, according to Dealogic. It also stands out for the range of projects in which it was involved.

Standard Chartered’s project finance work extended to Cameroon, Djibouti, Nigeria, South Africa, Senegal, Uganda and Zambia, across ports, telecommunications and power, as well as energy and mining. In many cases it acted as sole arranger or sole adviser, or as hedging and structuring bank, or as coordinator of the project financings.

The bank worked on schemes to develop new oil fields in Ghana that are set to transform the country’s economy. Standard Chartered was global coordinator and structuring bank, as well as technical and modelling bank for the $900 million financing of an upstream energy development in Ghana for Kosmos Energy. It was also mandated lead arranger in a $2 billion development in Ghana by Tullow Oil, the biggest project deal of the year.

The momentum and advantage Standard Chartered enjoys in Africa is further evident in foreign exchange. In Euromoney’s 2010 foreign exchange poll, the bank climbed to number one in the league table for all products, ranked by voters based in Africa. Its market share of 32% was more than twice that of its nearest competitor, Citi.

Among the innovative products Standard Chartered developed this year were the first cross-currency swap in Zambia, the first euro-pula trade in Botswana, and the first dollar foreign exchange forward in Gambia, as well as the first flexi-forwards in Kenya and Zambia. It was also the first bank to trade FX forwards into Sierra Leone and Côte d’Ivoire. These developments greatly improve risk-management opportunities.

Standard Chartered has greatly advanced the wider risk-management offering in Africa as well. It executed the first local-currency interest rate swaps in Kenya and Tanzania. In Ghana, the bank closed the country’s first interest rate option. In Zambia, Standard Chartered helped a client in the mining industry by providing Zambia’s first copper hedge. It also developed an instrument to protect the largest nickel miner in Botswana from falls in the nickel price.

In Euromoney’s October 2009 cash management poll, Standard Chartered rose from third to second among non-financial institutions, while among financial institutions it climbed to the top five in all categories. However, Citi still dominates cash management in Africa. Except in Ghana and in Mozambique, there is not one African category in which Citi does not come top in cash management.

Citi’s transaction volumes and revenues continued to grow. It has introduced much-needed new ways of servicing its clients in areas such as cheque payments in Senegal, or through ATMs in Kenya. Citi’s clients in cash management reach from Algeria to Gabon and even to the south of Sudan.

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