Standard Bank Group’s (SBK) Angolan unit is targeting corporate clients with annual revenue of more than $100 million as it benefits from the lowering of the credit ratings of Portuguese competitors due to the economic crisis in the African country’s former ruler.
The long-term debt of the South African bank, the continent’s biggest lender, is rated by Moody’s Investors Service at Baa1, the third-lowest investment grade rating while Lisbon-based Banco Espirito Santo SA is rated Ba3, the third-highest junk, or non-investment grade, level, matching Portugal’s assessment.
“We are the only bank in the market that is a subsidiary of an investment-grade bank,” Chief Executive Officer Pedro Coelho said in an interview at his office yesterday in Luanda, the capital. “This brings us to an interesting position with clients who are concerned with the quality of the balance sheet.”
Standard Bank, which started operations in Angola in 2010 after gaining a license the year before, is the latest major lender to gain a license in Africa’s second-biggest oil producer. The $114 billion economy is forecast by the World Bank to expand by 7.2 percent this year as 23 banks vie for market share in an country recovering from a 27-year civil war that ended in 2002.
The Johannesburg-based company is expanding to 27 branches in Angola by the year’s end from one branch three years ago. It won’t focus on retail banking because it lacks the scale to compete effectively in that market, Coelho said.
The focus is on clients in the oil and gas industries, as well as companies in import-export, construction and food and beverages, he said.
The lender offers banking services, including home loans, to the employees of some of its bigger corporate clients, and currently has about 20,000 customers, he said.
With the top five banks in Angola controlling more than 80 percent of the market smaller lenders will probably combine, Coelho said. Other banks operating in the country include local lenders Banco BIC SA and Banco Angolano de Investimentos SA.
“In order to be relevant, a bank has to be in the top five” Coelho said. He couldn’t give details on his bank’s market position and declined to say whether the lender would make any acquisitions in Angola.
While the government is pushing for more lending in areas such as business starts and home ownership, Coelho said the industry is hampered by lack of access to capital markets.
Angola’s bond market is supposed to start this year, according to the Capital Markets Commission, while stock trading is forecast by about 2016. Banks, telecommunication and energy companies are expected to list on the exchange, Coelho said.
“There is a big commitment from the government” to develop capital markets starting with fixed income securities trading, he said. “Angola is the right size to have an important exchange in the African context.”
In order for the stock exchange to “become a reality” Angola needs to develop asset management and pension fund industries, Coelho said.
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