Foreigners remain large owners of SA banks

A glance at the domestic banking landscape.

JOHANNESBURG – Foreign shareholders held 50% of the nominal value of the South African banking sector’s shares in issue at December 2014, a South African Reserve Bank (Sarb) report shows.

This was up from 47.7% at December 2013 and 43% at December 2012.

Neelash Hansjee, senior investment analyst at Old Mutual Equities, says that foreign ownership of domestic banks is both positive and negative. “Positive, as it reflects the quality of South African banks and the stability in the SA banking system as an investment destination, and negative, as these can be volatile flows,” Hansjee explains.

“In an emerging market context, the volatility in South Africa has been relatively limited compared to other countries such as Russia, Turkey and Brazil. Thus South Africa and the South African banks appear to be a relatively safe place as an investment destination,” Hansjee adds.

Barclays Bank Plc’s 62.3% ownership of Barclays Africa Group – which owns Absa Bank in South Africa – served to increase the percentage of banking-sector shares held by foreign shareholders, the Sarb said in the 2014 annual report of the bank supervision department.

Domestic shareholders held roughly 24% of the SA banking sector, down from 27% in 2012, while shareholders holding less than 1% comprised 25.8% of the nominal value of banking sector shares in issue at the end of December 2014.

Screen Shot 2015-10-20 at 11.02.03 AM

Source: Sarb annual report 2014

Foreign banks have firm presence

As at December 2014, 14 registered local branches of foreign banks existed, including the likes of Citibank, Deutsche Bank and HSBC, as well as Bank of Taiwan and Bank of India.

In fact, four Indian banks have registered local branches here, including Bank of India, Bank of Baroda, Canara Bank and State Bank of India.

An additional two Indian banks have local representative offices: Export-Import Bank of India and Icici Bank.

At December 2014 there were 40 foreign banks with approved local representative offices. These 40 banks represented 20 jurisdictions.

There were 16 banks actually registered in South Africa at December 2014 (including Capitec, FNB and Standard Bank), as well as three mutual banks in addition.

Some of the less well known registered banks in South Africa include Bahrain-headquartered Albaraka Bank, Habib Overseas Bank, which is controlled by Luxemburg-based Pitcairn’s Finance; and HBZ Bank Limited, a subsidiary of Habib Bank AG Zurich.

The table below reflects the registered banks in SA (excluding mutual banks) and their total assets at December 31 2014. 

Institution

Total assets at December 31 2014 (Rbn)

Annual growth (%)

2013

2014

Absa Bank Limited

777.8

807.1

3.76

African Bank Limited

69.9

51.3

-26.61

Albaraka Bank Limited

4.4

4.8

8.87

Bidvest Bank Limited

4.732

 

4.722

-0.21

Capitec Bank Limited

44.5

51.9

16.63

FirstRand Bank Limited

785.3

856.9

9.11

Grindrod Bank Limited

9.4

9.3

-0.91

Habib Overseas Bank Limited

1

1.2

14.01

HBZ Bank Limited

3.4

3.8

7.92

Investec Bank Limited

274.2

310.1

13.12

Mercantile Bank Limited

7.6

8.4

10.74

Nedbank Limited

661.9

714.4

7.93

Sasfin Bank Limited

4

4.7

16.6

The South African Bank of Athens Limited

2.2

2.3

3.65

Standard Bank

979.9

1 trillion

12.21

Ubank Limited (formerly Teba Bank Limited)

4.4

4.3

-2.66

Source: Sarb annual report 2014

The report shows that total banking sector assets increased by 8.8% to nearly R4.2 trillion at the end of December 2014.

Islamic Bank Limited and Regal Treasury Private Bank Limited remained in final liquidation, having had liquidation orders granted in January 1998 and February 2004 respectively.

 

 

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