(Finance) – Theexit of French banks from Africawhich is nearing the end, offers emerging pan-African banking groups significant space to grow, both organically and through mergers and acquisitions. Fitch Ratings states this in a new report on the topic. This should stimulate competition and benefit local banking sectors despite some short-term challenges, it is highlighted.
Societe Generale announced on April 12 sale of Société Générale Marocaine de Banques (SGMB) and its subsidiaries to the Moroccan conglomerate Saham Group. This follows several African divestments by French banks in recent years. Over the past six months Société Générale has also agreed to the sale of some other smaller African subsidiaries and initiated a strategic review to divest its 52.34% stake in Tunisia-based Union Internationale de Banques.
Even the African presence of BNP ParibasBPCE e Credit Agricole And decreased in the last 10 years and it is now very limited. Fitch expects further divestments over the next 12-24 months, especially if valuations are attractive for the selling banks.
The divested subsidiaries face several challenges as the their parent companies’ risk appetite was lower than that of their local competitors. Furthermore, the exit of high-level foreign shareholders is often negative for subsidiaries’ credit.
A lower rating, or the exit of a foreign shareholder, could yield access to the global financial system is more difficult and correspondent banks, potentially disrupting cross-border remittances, payments and trade finance activities.
Fitch Ratings explained that French banks’ exit from Africa’s retail and commercial banking sector is mildly positive for credit. They are refocusing on the more mature retail banking markets in Europe and on activities such as insurance, leasing, corporate and investment banking, where they can achieve greater synergies.