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Business Reporter
STANDARD Bank Group and the Industrial and Commercial Bank of China (ICBC) have entered into an agreement where the latter will acquire a controlling interest in Standard Bank’s London-based Global Markets business. In a statement, Standard Bank group chief executive Ben Kruger said ICBC would acquire 60 percent of the group’s subsidiary in the United Kingdom. “ICBC will acquire for cash 60 percent of Standard Bank Plc, the group’s UK subsidiary and the primary legal entity used by this business, and its other international operations,” he said.
Kruger said the proposed transaction requires the implementation of a series of steps to constitute Standard Bank as the platform for a focused Global Markets business.
The Global Markets business which is the subject of the proposed transaction includes commodities, fixed income, currencies, credit and equities products, and operations in New York, Dubai, Singapore, Shanghai, Hong Kong and Tokyo.
He said other activities conducted outside Africa and the offshore businesses were not part of the deal but would transfer into new wholly owned legal entities.
“Standard Bank’s other activities conducted outside Africa, comprising investment banking, transactional products and services, corporate banking and services unit, are not part of the deal and will be transferred into new, wholly owned legal entities in London, New York, Dubai and Hong Kong. Sao Paolo, Beijing and the offshore businesses are also not part of the deal,” he said.
Kruger said the value for the 60 percent shares would be based on the net asset value and other relevant operations.
“The purchase price will be based on the net asset value of Standard Bank Plc and other relevant operations. As at the end of June 2013, the consideration for this transaction was estimated to be $765million,” he said.
He said ICBC would be granted a five-year option to buy 20 percent of the outstanding ordinary shares two years after the completion of date of the deal.
“ICBC will be granted a five-year option to purchase a further 20 percent of the outstanding ordinary shares of Standard Bank Plc exercisable from the second anniversary of the date of completion.
“The bank will have an option to sell its residual shareholding in Standard Bank Plc to ICBC for cash after ICBC’s option has been exercised,” he said.
Kruger said the transaction presents a good opportunity to realise proceeds on disposal that will release a significant amount.
“The transaction presents an opportunity to realise proceeds on disposal that will release a significant amount of capital for the group from its operations outside Africa, which can be effectively deployed in furthering the Group’s growth strategy in South Africa and across the African continent,” he said.
He said completion of the transaction was subject to regulatory approvals in multiple jurisdictions.
“Completion of the transaction is subject to regulatory approvals in multiple jurisdictions, including the South African Reserve Bank, the transaction requires approval of shareholders of Standard Bank, which will be sought at a shareholders’ meeting, expected to be held in March 2014,” said Kruger.
ICBC chairperson Jianqing Jiang said development of the Chinese economy and financial reforms have posed new demands for the transformation of service and business models for Chinese banks.
He said the joint venture would explore and develop many opportunities for both companies.
Standard Bank Corporate and Investment Banking chief executive David Munro said the partnership reflects the importance of direct linkages with emerging marketing economies.
“The partnership reflects the fact that the direct linkages between emerging market economies generally, and China and Africa in particular, are increasingly important contributors to the global economy,” he said.
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