Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

STANDARD Bank, Africa’s largest bank by assets, said on Thursday it would make about R1.6bn from the sale of its stake in Standard Bank Argentina to the Industrial and Commercial Bank of China (ICBC).

The Central Bank of Argentina approved the deal last month — nearly 15 months after Standard Bank concluded a sale agreement with ICBC in August last year for $400m. Standard Bank said there would be a minor upward adjustment to the $400m.

The proceeds from the sale will be used to support Standard Bank of SA’s growth, Standard Bank said on Thursday.

It added that the profit realised from the sale would help boost its tier-1 capital adequacy ratio to 11.6%.

Standard Bank has sold a 55% stake, but will retain a 20% holding. It will have the right to board representation.

ICBC said in a statement last month that Standard Bank Argentina had net profit of $86.6m to end-September and total assets of $4bn. It had nearly 100 branches and more than 700 automated teller machines. the group served 910,000 personal customers, 30,000 small and medium enterprises and 1,500 corporate clients.

Vestact analyst Paul Theron said the completion of the deal in Argentina would help Standard Bank focus on Africa operations.

Analysts say if Standard Bank could improve its return on equity in the rest of Africa from 10.6% at present, investor confidence in the banking group would improve. Standard Bank is active in 18 African countries.

Some analysts say the bank will need to exploit its first-mover advantage by scaling up operations in the rest of Africa as competition is likely to intensify.

Absa has already announced it is merging its Africa operations with Barclays. It has reduced its exposure outside Africa.

In April Standard Bank reduced its stake in Turkey’s Standard Ünlü from the 67% it bought in 2007 to 25%. In March last year it sold its 36.4% stake in Russia’s Troika Dialog.

In October Standard Bank Private Clients said it was closing down its international trust and fiduciary division on the Isle of Man as part of a rationalisation process.

Standard Bank also noted on Thursday that conditions in international operations remained challenging.

In the six months to end-June Standard Bank Plc posted a headline loss of $34m and costs increased 7%. The bank wants to cut 15% of its 900 employees in London. It aims to save $100m a year from international operations.

"This process is proceeding according to plan and it is estimated that the one-off costs relating to this rationalisation exercise will be approximately $80m," Standard Bank said.

"These costs include estimated retrenchment costs, office lease termination costs and software asset write-offs and will be recognised as a restructuring charge in 2012."

Standard Bank shares ended up 0.47% at R108.52 on Thursday.