South Africa: Banks tempt foreign players
Further banking sector consolidation is on the cards in South Africa, analysts predict, as projected GDP growth of more than 4% for 2005 tempts foreign players in.
FirstRand Bank is top of the list of likely targets, with Standard Chartered and Citigroup said to be among possible contenders.
Fitch upgraded the sovereign to BBB+ from BBB at the end of August, underlining the reasons foreign banks are keen to grab market share. The agency's decision followed a similar move by rival Standard & Poor's earlier in the month.
Fitch analyst Veronica Kalema says: "South Africa's growth performance during the past two years has exceeded expectations. The entrenchment of macroeconomic stability as well as increased public investment and other supply-side reforms have improved prospects for sustained higher growth averaging around 4% over the medium term."
FirstRand is part of FirstRand Bank Holdings, the fourth-largest banking group in South Africa, with a market share of about 18%.
The UK's Barclays Bank agreed to buy a 60% stake in Absa earlier this year for R33 billion ($5.5 billion), the largest single foreign investment into South Africa. That deal marks Barclays' return to the country, almost 20 years after being forced to sell its South African holdings – which ironically included FirstRand Bank – as a result of protests in the UK against apartheid.