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Chinese Bank Buys into Africa

Standard Bank has unveiled “a major strategic partnership” with Industrial and Commercial Bank of China Limited (ICBC), in terms of which ICBC will become a 20% shareholder in Standard Bank Group. This deal will result in a ZAR 36.7 billion (approximately $5.5 billion) equity investment into Standard Bank, which is the largest foreign direct investment into the country and is a landmark transaction for Africa, South Africa and Standard Bank. Foreign ownership of Standard Bank, currently at around 25%, will increase to approximately 40% after the proposed transaction, leaving Standard Bank still majority South African-owned. The transaction is subject to the approval of the South African Registrar of Banks, the China Banking Regulatory Commission, the JSE, and Standard Bank and ICBC shareholders.  The proposed transaction would represent ICBC’s largest investment outside of China. ICBC Chairman Jiang Jianqing says: “From a strategic perspective, ICBC has been seeking opportunities to expand its international business, in particular in Africa given strong trade linkages and the close and long standing friendship between China and South Africa. As many of our large clients seek investments in Africa, the demand for cross border financial services is accelerating. Standard Bank with its market leading position in South Africa and a true pan-African footprint, represents the best organization with which ICBC can partner.”  Jacko Maree, Standard Bank Group Chief Executive, adds: “A partnership between Standard Bank and ICBC is attractive as each party brings numerous complementary benefits to the relationship. Both banks can benefit through the creation of new revenue streams, access to the new partners’ expertise and sharing distinctive local market knowledge and expertise. By partnering with Standard Bank, the largest bank in Africa, ICBC will be able to enhance its service to its domestic customers seeking to do business in Africa.”

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