SocGen and Absa mull CIB tie-up


Dominic O’Neill
Published on:

Partnership could replace broken Barclays links; follows rumours of sale of Société Générale South Africa custody unit to Absa.

Absa chief executive Maria Ramos

Société Générale and Absa, formerly Barclays Africa, are discussing setting up a corporate and investment banking (CIB) partnership in Africa, Euromoney understands.

The idea for a new wholesale banking partnership comes as Absa seeks to regain the global links it lost when Barclays sold its stake in the Johannesburg-based group.

It launched its UK office on Thursday, with plans to open a New York office next year.

SocGen, for its part, is seeking to boost coverage beyond its traditional Francophone markets, including in the 16 mainly Anglophone countries in which Absa owns banks formerly part of Barclays.

Absa has previously broached the possibility that it could set up such a partnership, based on pooling clients, with Barclays.

“We have, as part of the transition, ongoing arrangements and a relationship with [Barclays] PLC,” Absa chief executive Maria Ramos told Euromoney last year. “I imagine beyond this transition that Barclays is still going to need a partner on the continent and we will need an international partner.”

Custody business

Now Absa is working more closely with SocGen. The two banks were in talks on a sale of SocGen’s South African custody business to Absa to replace the business it offloaded in 2013 as part of Barclays, according to a report in early August by Reuters.

Earlier this month, Absa awarded Société Générale Securities Services a UK mandate for its wealth and investment management business.

SocGen is slimming down in those countries outside France where it does not have critical scale, announcing sales of its Albania and Bulgaria banks to Hungary’s OTP Bank in August.

However, chief executive Frédéric Oudéa put international retail and financial services at the heart of SocGen’s new three-year strategy late last year, including an aim to post 8% annual revenue growth in Africa.

The French bank has already made efforts to boost its coverage network in East Africa this year with a new Nairobi representative office and participating in a $750 million senior unsecured loan to the Kenyan finance ministry.

A South Africa sale would not imply a Barclays-style retreat from Africa by SocGen, according to a senior source at the bank.

Instead, it would be an acknowledgement that it can gain more market share outside South Africa, given the difficulty of competing with local institutions such as Absa in the continent’s biggest financial sector.